City Developments Limited (CDL) CEO Sherman Kwek says plans for a REIT IPO of its UK commercial assets, which were shelved in late-2022, are back on the table.
Speaking at CDL's 62nd annual general meeting on April 23, Kwek says the move would have added some $3 billion in assets under management to the group's fund management business had it gone ahead.
The developer applied to list a REIT on the Singapore Exchange 's Mainboard in 2021, reportedly with two commercial buildings.
Bloomberg reported then that the IPO could raise some GBP500 million in a 3Q2021 debut, with a portfolio size of about GBP1.8 billion.
However, CDL did not go ahead with the listing, citing a challenging market and an "unprecedented interest rates hike" in 2022, according to its financial statements for FY2022 ended Dec 31, 2022.
CDL had acquired Aldgate House from a joint venture of Hermes Investment Management and the Canada Pension Plan Investment Board for GBP183 million in September 2018. The following month, CDL acquired 125 Old Broad Street from Blackstone for GBP385 million.
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CDL acquired a third UK commercial asset, St Katharine Docks in central London, for GBP395 million in March 2023.
Kwek notes that CDL now has three properties in the UK. "When conditions are right, it is something we would like to explore again," says Kwek to a packed ballroom at M Hotel Singapore City Centre, which was also livestreamed to an overflow hall at the same hotel and to virtual attendees.
As at end-2024, CDL's UK commercial portfolio reported a committed occupancy of 79.5%, pulled down by several tenants vacating their premises at 125 Old Broad Street, Aldgate House and St Katharine Docks.
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"However, with over 153,000 sq ft of renewals/lettings achieved in 2024, occupancies are expected to stabilise and start trending up again," says CDL in its FY2024 annual report.
Kwek notes that some developers in Singapore have done a "really good job" of creating fund management platforms, but CDL has had "a slower start".
Kwek envisions selling assets into funds where CDL will "have a small stake", thereby giving the group "good recurring income".
According to CDL's latest annual report, the group is focused on pursuing its fund management strategy through organic and inorganic growth.
CDL says it owns a "sizeable" UK commercial and purpose-built student accommodation (PBSA) portfolio, and Japan private rented sector (PRS) portfolios across Tokyo, Osaka and Yokohama. These generate "stable" recurring income, adds the group.
"Amid a challenging market environment marked by volatility and geopolitical risks, the group remains committed to recycling these balance sheet assets for organic growth and scaling up its fund management platform, both via public and private platforms," says CDL in its annual report.
As at 4.40pm, shares in CDL are trading 6 cents higher, or 1.24% up, at $4.90.
