City Developments Announces New Launches Lower Interest Cover 1Qfy2024 Update

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City Developments (CDL) has reported its business updates for the first quarter of its fiscal year 2024, covering the period from January to March. The company has recorded a slight increase in its net gearing ratio, which stands at 63% as of March 31, compared to 61% on December 31, 2023. The interest coverage ratio has, however, decreased significantly to 1.2x, a sharp drop from 2.8x in FY2023 and 9.8x in FY2022. Despite these figures, CDL asserts that it remains in a strong financial position with cash reserves of $2.4 billion. It also holds a robust liquidity position, with $3.7 billion in cash and available undrawn bank facilities. CDL adds that its debt expiry profile remains healthy and that it has a substantial level of natural hedge for its overseas investments. The company maintains that it will continue its proactive and disciplined approach to capital management. In March this year, CDL launched a share buyback programme for its ordinary shares. As of April 23, the company has acquired 10,442,800 shares for a total consideration of $61.3 million, representing 1.15% of its issued shares. Despite the share buyback, CDL will be delisted from the MSCI Global Standard Index on May 31. In May, after the end of the first quarter, CDL acquired the 268-room Hilton Paris Opéra hotel for EUR240 million ($350.2 million). On the capex front, the company has planned asset enhancement initiatives (AEIs) for four hotels. In London, it will spend GBP16.5 million ($28 million) to renovate the Millennium Hotel London Knightsbridge and rebrand it as M Social Knightsbridge in 1H2025. The M Social Phuket will undergo Phase 2 of AEI, and CDL will have spent $36.9 million on the Phuket property in total. Meanwhile, the Millennium Downtown New York will be renovated and rebranded as M Social Downtown New York by 1H2025, with renovation costs of $57.9 million. In addition, the M Social Hotel Sunnyvale in California, currently under construction and slated for completion in 2H2026, is expected to cost US$115 million ($154.8 million). CDL plans to launch two new residential projects in 2H2024, the first being the Union Square Residences, which comprises 366 units as part of the Group’s larger redevelopment project named Union Square. The project is located at the former Central Mall site and Central Square. The second project consists of 348 units and is located at Champions Way in Woodlands, within walking distance of the Woodlands South MRT Station. On the revenue front, CDL associate Cityview Place Holdings, which holds 203 units at The Residences at W Singapore Sentosa Cove, offered a special price for 58 selected units for a limited period. Including past sales, 76 units were sold in total. In 1QFY2024, the group and its joint venture associates sold 429 units with a sales revenue of $736.8 million, compared to 88 units sold and a sales value of $213.2 million in the same quarter last year.