The $144.3m pre-tax gain from the Manulife Centre divestment pushed up earnings.
City Developments’ (CDL) profits skyrocketed 133.8% YoY to $199.56m in Q1 from $85.34m in 2018, an announcement revealed. However, revenue crashed 29.5% YoY from $1.06b to $746.16m.
Its robust profit performance was boosted by strong profit margins for development projects recognised during the quarter, and the realisation of a $144.3m pre-tax gain from the divestment of Manulife Centre. Profit was further aided by higher rental income from recently acquired properties, including Aldgate House and 125 Old Broad Street in the UK, Central Mall as well as Le Grove serviced residences in Singapore.
The dip in revenue was attributed to higher profit margins for the development projects that contributed to the Q1 2019 results, as well as the absence of revenue recognised in 2018 from The Criterion executive condominium (EC) in entirety following its completion in February 2018.
“Excluding the contribution from The Criterion EC, Q1 2019 revenue would have increased by 6%,” the firm highlighted.
In terms of business segments, rental properties took the lead in Q1 2019, contributing 68% in pre-tax profits primarily attributable to the divestment of Manulife Centre and contributions from recent acquisitions.
The property development segment was the next strongest contributor, largely supported by several of the group’s key local projects, including Gramercy Park, New Futura, The Tapestry, Whistler Grand, South Beach Residences, as well as overseas projects like Hong Leong City Center in Suzhou and Hongqiao Royal Lake in Shanghai.
In Q1 2019, the group and its joint venture (JV) associates sold 173 units with total sales value of $516.m. Notably, the group launched only one project during the quarter, 154-unit Boulevard 88, as compared with New Futura and The Tapestry in Q1 2018. Almost all or 98% of the 124-unit New Futura condominium at Leonie Hill Road have been sold at an average selling price (ASP) of over $3,500 psf, with only three units remaining.
At The Tapestry, the 861-unit condominium project in Tampines Avenue 10, 619 units (72%) have been sold at an ASP of about $1,350 psf, whilst at Whistler Grand, the 716-unit condominium at West Coast Vale, 320 units have been sold at an ASP of about $1,380 psf.
Meanwhile, the hotel operations segment is largely contributed by the group’s 65.2% subsidiary, Millennium & Copthorne Hotels (M&C). This segment registered a loss in Q1 2019 due to a myriad of factors, including a challenging US region which continued to be loss making, and higher net financing costs.
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In addition, the segment was impacted by the Mayfair and Orchard Hotel property refurbishments in the UK and Singapore, respectively. The ongoing refurbishment of the Mayfair hotel, which is now renamed The Biltmore, Mayfair, is expected to complete in mid-2019. The hotel will have 257 luxurious guest rooms plus 51 suites. Refurbishment work at the common spaces at Orchard Hotel in Singapore has been substantially completed. Currently, phased works on 260 guestrooms at the Orchard Wing are in progress and targeted for completion in Q2 2019.
With demand expected to be underpinned by displaced en-bloc-sale owners, first-timers and upgraders who are less affected by the cooling measures, CDL’s freehold 592-unit JV project Amber Park was launched on 4 May. The group is planning to launch another three new developments, Haus on Handy, Piermont Grand and Sengkang Central, later in 2019.
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