City Developments Ltd. (CDL)—controlled by billionaire Kwek Leng Beng—has deferred plans to list its commercial properties in the U.K. on the Singapore Exchange amid heightened market volatility and macroeconomic headwinds.
The company aimed to raise about 500 million pounds ($607 million) from the maiden share sale of a portfolio of U.K. commercial properties—including an office building housing HSBC’s headquarters in London—that it proposed to inject into a REIT and list on the Singapore Exchange.
“The unprecedented interest rate hikes in 2022 have severely impacted the initial public offering of REITs in Singapore, with several planned IPOs and secondary fund-raising exercises of REITs withdrawn,” CDL said in a regulatory filing late Wednesday. “Amid this challenging market, the group is placing a temporary pause on its IPO aspirations for its U.K. commercial properties until the market stabilizes.”
Despite prevailing global economic uncertainty, surging inflation and rising interest rates, CDL said “the group is confident of weathering the storm and emerging stronger.”
The company said it has adequate financial headroom to deleverage and seek opportunistic investments following the divestment of the Millennium Hilton Seoul and the sale of its stakes in two Singapore commercial properties such as Tanglin Shopping Centre and Golden Mile Complex. As of September 30, it had strong cash reserves and undrawn bank facilities totaling S$4 billion ($2.9 billion)
While sales of its Singapore residential properties dropped 24% to S$1.9 billion in the first nine months of the year, CDL said it expects demand for property to remain resilient due to the industry’s low inventory of unsold properties. Most of the company’s projects are more than 80% sold, it said.
The group’s hotel business is also improving as travel demand rebounded with the easing of Covid-19 restrictions. Globally, revenue per available room jumped more than doubled in the first nine months of the year, with those in London and New York showing marked improvements. Occupancy rates in Singapore jumped to 89% in the third quarter as the Lion City hosted back-to-back international events including the Formula 1 Grand Prix.
Kwek is the chairman of CDL and Singapore’s Hong Leong Group, which was founded by his father in 1941. His cousin Quek Leng Chan, also a billionaire, runs a separate group in Malaysia, also called Hong Leong. With a net worth of $9.3 billion that he shares with his family, Kwek, 81, was ranked No. 5 on the list of Singapore’s 50 Richest that was published in September.