City Developments Limited

Good morning, ladies and gentlemen, friends from the media, analysts, bankers, investors, and CDL colleagues. My name is Belinda, and I'm the Head of Investor Relations and Corporate Communications at CDL. On behalf of the management, a very warm welcome to CDL's briefing on its unaudited first half 2024 financial results. Thank you for joining us this morning. and to download the following documents that were already uploaded on the SGX website this morning. They include a copy of the detailed financial statement, a press release summarizing the key highlights of our performance, a presentation deck that the group will be going through very shortly, and for our guests that are joining us live on webcast, you will similarly be able to download these documents on our website on the tab in front of you. Thank you very much. followed by our ex-co-members, Mr. Sherman Quek, our Group CEO, Mr. Quek Ik-Shing, our Group Chief Operating Officer, Mr. Chia-Niang Hong, our Group General Manager, and Ms. Yong Yin Meng, our Group Financial Officer, Chief Financial Officer. The format of today's briefing will be in two parts. We will kick off with a presentation of some of the key highlights and then followed by a Q&A opportunity. Now, without further ado, I would like to invite Mr. Sherman Quek CDL Group CEO to kick-start the presentations.

Mr. Craig, please. Maybe I might have to use this because I have to stand near the mic for the computers all the way there. Anyway, thank you. Today, all of you quite formal give me some applause as I come up to the stage as well, even though, as I'll take you through, we have faced quite a lot of sector headwinds. So I know we didn't exactly release the prettiest set of results, but we have a lot of stuff in the works, and we intend, I think, to further accelerate things as we move forward. So as you can see, in the first half of 2024, I mean, our revenue is down, primarily because the same period last year, corresponding period last year, we had this Piermont grant, our EC project in Punggol that TOP'd in January last year. And as you all know, I mean, when EC projects TOP, that's when you recognize the full revenue and profit and Thank you very much. Thank you very much. recurring income assets on the multifamily side, on the student accommodation side. And many of them are doing very well, but in this high interest rate environment, it's actually quite difficult, I think, to even cover the financing costs. But having said that, I mean, I think we are generally of the view that hopefully next month we will see the first signs of easing as interest rates hopefully start to taper down. And that should lift a lot of pressure of our business. The other thing that impacted us was we had certain projects, not all, but certain projects that are also delayed on the construction side. So in terms of sales value, I mean, over the last few years, we've actually done well, I would say. But as you know, in Singapore especially, you recognize based on the progress of construction, right, of completion and completion, And so once construction is delayed, it's a timing of profit recognition. So unfortunately, with some delays that we faced over the last 12 months, we didn't recognise as much profit as we thought we were going to in the first half of this year. But as I said, the good news is that all that's locked in, so that will come in in the next few quarters. In terms of our metrics, they are what they are. Our share price hasn't exactly performed too well, and obviously on 31st May, we suffered from the deletion from the MSCI Singapore Index, which certainly was a blow to us. It was something we were keen to avoid, but it's happened, and it doesn't mean we can't get back into the index again at some stage, but we will certainly keep powering ahead. Our For lack of a better term, RRNAV, which revalues all of our fair values, all of our investment properties and hotels, has ticked up slightly to $19.49. So we are certainly at the current share price trading at a very, very deep discount, which is also why we did some share buybacks over the last couple of months. Although we've kind of just put it on hold for the time being because obviously our gearing has gone up, so we're just assessing where we are right now. We can restart it again at some point in the future, but we really do need the interest rate environment to be a little bit more favourable before we proceed forward. And for this year, I think out of prudence, we are so-called declaring a two cents dividend. compared to last year's $0.04 for the first half, but it doesn't mean, again, we can't do a bigger dividend at year end. I think we just want to see how things pan out, and it is a very uncertain environment, and costs are high. I think all of you know that in the development side of things, not just in Singapore, but globally, costs have gone up substantially from both labour costs and materials, and that is stabilising but really hasn't tapered down, so it has put a lot of pressure on the development side of the business too. I won't go into this in very deep detail because I have more slides later on in this deck that talk about it. But basically, for last year, we sold about 588 units with total sales value of $1.2 billion. Sorry, for the first half of this year, 588 units with a total sales value of $1.2 billion, which I think was a good showing. Obviously, much of that sales came from Luminar Grand, our EC that we launched in Bukit Batok West Avenue. and we're really glad to see that the take-up has been very strong for that. The truth is, in the first half of this year, the whole Singapore market saw a lot lower number of new unit launches. I think for last year, first half of 2023, total number of new units launched was about 3,400, but whereas this year is about 2,400 across the whole market. So it's about 30% less than last year. That coupled with, obviously, in a high interest rate environment, it would cause some buyer caution as well. Therefore, it resulted, I think, in the overall market being weaker than the same period last year. So I think we've seen the numbers already from the URA residential index. I mean, this year, I think we are, for the first half of this year, for the whole market for new launches, we're just under 2,000 units. Versus last year for the full year, it was about 6,400 units. So this year, we are likely, we forecast, I think the general consensus view is that we'll probably end up around 5,000 to 6,000 units for the full year, for the full market. But it is what it is. Prices so far for this year for the Singapore resi market, according to the URA, index has gone up about 2.3%. And so we are also general consensus is forecasting that the price increase for the full year will be about 2.5 to 3.5 thereabouts. So certainly down from, I think, for the full year of 2023, the prices were up about 6.8%. So I think after three years of very, very strong price increases, I think this year we're starting to see things moderate quite a bit. So aside from Lumina Grand, where we've done really well since launching in January, we have also strengthened our development pipeline locally. We have participated in this and been awarded this Zion Road tender. I'll go more into that later, as well as obviously there's this Jurong Lake District mega tender that's not been awarded yet. And then recently we would have seen news for this en bloc sale of Delphi, where we decided to acquire it back, which makes sense since we own the two plots next to it, which is Claymore Connect, the retail mall, as well as Orchard Hotel. In China, the bulk of our residential inventory that's been launched has been sold. We do have a new project in Suzhou that we acquired last year, so that we are looking to launch it beginning of next year. And then in Australia, we have two projects in Brisbane, but both are also substantially sold. On the hotel side, I think we've all seen very, very positive momentum. Last year was an extremely strong year for hotels, same for the first half of this year. No doubt there are some headwinds building up again for the hotel sector, but so far I think it's been very encouraging for us. You can see Red Power is up 3%, occupancy up almost 2 percentage points, and ARR has ticked up slightly against the first half of last year. And we had certain regions like Australasia that outperformed and achieved a 30% increase in red power. That was mainly driven by the acquisition of the Sofitel Brisbane Central, 416 rooms there. And then, of course, we also in the recent months announced the acquisition of the Hilton in Paris. On the commercial side, things are still doing pretty well. I think there may be some headwinds ahead. But I think there's still limited supply on the office side, so that helps to keep things in check. So far, I think for first half this year, for the whole Singapore office market, rents and occupancy are pretty much stable. Same for the retail sector in Singapore as well, pretty much stable. And our portfolio has still held up and been resilient. Same thing in the UK. Despite the UK facing more challenges, not as bad as the US, but still more challenges because of work from home and All kinds of other stuff. But I think our portfolio in the UK is still doing well. And then, obviously, there's the living sector, which has been a big focus for us in the last few years. We continue to expand with a couple more acquisitions. I'll talk more about those later. And same with our PBSA portfolio. And then on fund management side, I'll have a slide on that. This one just shows you what our portfolio is like. On our books, $24 billion. If we fair-valued everything, the IPs and hotels, our asset base is about $33 billion sink right now. So we definitely have to push ahead and accelerate our capital recycling, I think, to really start to monetize more and unlock more value, latent value from our existing portfolio. And the breakdown geographically and business segment is shown there. Okay, back to our GT strategy, growth and enhancement transformation. On the growth side, we've continued to deploy capital, not as fast as last year. I think we've been slowing the pace down. Last year, we deployed $2.4 billion. This year, so far, we deployed $1.1 billion. It doesn't include Delphi Orchard because the acquisition has not gone through yet. It's been awarded, but it has not gone through yet. It's pending sale completion. But so far, I think the big ones here are the Zion Road, where we partnered with Mitsui Fudo-san, 50-50, to take down, pass away Zion Road. This is that big greenfield, part of that big greenfield plot that's next to Great World City, Great World Mall. So really pleased with that, and that will be a strong project for us. We did three relatively smaller multifamily acquisitions in Japan – are all in very good locations. So obviously the prime one there is Akasaka, one of the three A's in Japan's central five wards. Multi-Family Assets BTR Yard House White City And it's a forward-funded mechanism. And then, of course, the hotels I mentioned earlier. And then on the right-hand side in the pie chart, you can see the breakdown of what we've acquired in terms of our asset class. Sing Resi Launch Pipeline. As mentioned earlier, really glad that we have done well on Lumina Grand, a 512-unit project. Design Road will yield over 700 units and that's coming along nicely on the design side. We're working very closely with Mitsui Fudo-san. We have our Newport residences that's been ready for launch since mid of last year. We're still waiting to see how things pan out before we launch it. This one obviously has Super Penthouse 13,000 sq ft Norwood Grant It's our project up in Woodlands. The last private residential launch in Woodlands was about 12 years ago. I think it's called Rosewood or something like that. I think it's going to be very, very strong pent-up demand because there's not been any new launch in 12 years. And then we have also Union Square Residences. I know we put in the generic picture showing you the three plots of land, but we have done a really outstanding design, and we wanted to save the visuals for when we launch it. We have also done up the show flat already, the sales gallery and show flats already. We actually took over the former Canning Hill Pier show flat. We have revamped it totally, so you won't even recognize it. It's a two-story show flat, so even the staircase, everything has been shifted. I mean, I would say to date it's probably one of the best projects that we've ever done. We've lifted the bar even more. So can't wait to host many of you at Union Square when we launch it for sale. We will unveil, as I said, more exciting visuals then, but it's a very, very stunning, striking architecture with two tall towers, one for residential, one for office, and of course a lot of co-living and retail facilities spread across some of the heritage buildings as well. And then this tripartite, this three-way consortium, of which we are one-third of, launched this cashier in July last month, and that's 56% sold. And then lastly, there's this Law 1 in Topayo, which will be only launching next year, first half of next year, That's also going to be, I think, a very spectacular project. The last launch in Toa Payoh was by EVL. It was called Gem Residences, and that was eight years ago. So the last private condo launch in Toa Payoh was eight years ago. So we think this is going to have very strong demand. We are 50% of the JV, together with Fraser's and Sekusui House, Japanese developer. So that will have around 777 units. So that's for next year. Okay, this is obviously the JLD, as we call it for short, Jurong Lake District, the JLD Master Developer Site. Our consortium was the only bidder, but we haven't been awarded yet, so we're still waiting for news. I would say we bid very cautiously on this, so if we get awarded, I would say that it will be a nice entry point for all of us. Max Laubo GFA, 365,000 square metres, so that's just shy of 4 million square feet, and it's split across 40% office, 40% resi, which is about 1,700 units, and the other 20% will be for hospitality, retail, and other uses across. So it's a very, very beautiful site, and anchored by two MRT stations on both ends of the plot. One is existing, the Jurong East huge interchange station, and the future Cross Island GLD station. These are the five developers that went in together, and I think we have formed one of the strongest consortiums ever, so we should be able to realize a very stunning vision for this GLD site if we are successfully awarded it. Strategic divestments, yes, earlier in the year, beginning of the year, I threw out a $1 billion number. We are quite far from that. The truth is there are Several big divestments I have underway, both in Singapore as well as overseas. But those are requiring time to negotiate, and those aren't going to happen so quickly. So what you see here are, for lack of a better term, the lower-hanging fruit. We sold things like our freehold strata industrial units at CityLink and CityTech. So those two are fully sold out. It was actually snapped up very fast, so I guess freehold industrial units are very sought after. Fortune Centre Fortune Centre Fortune Centre Fortune Centre Fortune Centre Fortune Centre I don't know if they can happen by this year. They may trickle into next year. But the truth is, I think the fact of the matter is they are underway, and hopefully, I hope they materialise sooner rather than later. So let's see how things go. On to enhancement. These are just some of the AEIs that we've completed. I think the last couple of years, while Phuket has been under a lot of pressure, and due to COVID and all that, I mean, Visitor arrivals were down. We took the opportunity to really revamp our very aged shopping mall. So we did a stunning revamp of the whole mall. I was just there recently together with the board, and we're really pleased with what has been done there. So extensive AI covering more than 200,000 square meters. We spent about 37 million Sing, about a billion Thai baht. and so far I think we're seeing very strong comeback for this mall as well and foreign visitorship is also strengthening. Likewise, we also spent a similar amount to do up the hotel there. It's a 418 room hotel and all works are now done. It's split between two wings. So we anticipate that this will start to strongly boost our investment properties segment. And then same thing in Singapore City Square Mall. I think the mall has done well for us over the years but has also aged. So we have done a very big $50 million revamp of the mall. Phase 1 is already completed, including the basement levels, and now we are pushing on to Phase 2. I mean, there are some other parts of the basement levels that still need to be done up further, but more or less completed. Phase 1 and Phase 2 is ongoing at the moment. So I think we are very confident that once the AEI is done, it will be a very fresh, new look for City Square Mall. And many of you remember for Republic Plaza Tower 1, we spent in excess of $50 million and did up the whole Tower 1, which so far, I think over the years, we reopened, so-called we relaunched Tower 1 in 2019 and gained a lot of compliments for what we've done to really brighten up and open up the space, the common areas and do up many of the floors. Likewise, I think it's time now for us to do Republic Plaza Tower 2, the smaller tower. So it's a small amount we're spending, but we are going to be changing the whole look of the tower as well. And it's going to look very nice after we're done by the middle of next year. As mentioned earlier, I think Union Square is a mixed-use development we're very, very excited about. I mean, we bought the neighboring plot, this central square from Faiz Hospitality Trust, and then amalgamated with the two sites that we owned. And so we were very privileged to apply for and get a 67% GFA uplift under the Strategic Development Center Scheme. And so now this is the breakdown that you see of the resi, the office, the retail, and the co-living. and we will be doing a very stunning project across this site and I think that should revitalise that whole area as well which traditionally has suffered from a bit of a lack of foot traffic. I will share more details on that in future briefings. There's a lot of good news for the office for this development. We've also been able to secure some heavyweight tenants in advance, so things are going really, really well. Newport Plaza, as mentioned earlier, we got a GFA uplift of 25% under the CBD incentive scheme, but We are holding back from launching the resi, but we are continuing with the construction. So we are at the superstructure stage now, and we continue to build. On the hotel side, we are continuing, I think, to convert more of our trophy properties into the M Social brand, which is a brand that has seen much success within our stable of brands and portfolios. So in London, for Millennium Knightsbridge, which enjoys a very prime location on Sloan Street, we are refurbishing it to a tune of 28 million singh, and this should be completed by next year. And for New York, this is the downtown in New York, the one that's actually near the World Trade Centre, the former World Trade Centre. And this, we are rebranding it and repositioning it to the M-Social, downtown New York. And then, obviously, there's a new build in Sunnyvale, which was formerly an old hotel. We tore it down. We have built a multifamily where the former hotel sits. And then on another part of the site, we're building a new hotel there. So that is anticipated to be the M-Social in Sunnyvale. Sustainability leadership, not going to cover this slide too much, but I think we're very grateful to still be one of the leading companies in the world on the sustainability front. Much credit, I think, to my predecessors before me who started this whole push to make us greener. Since 1995, and I think for close to three decades, we've just been pushing ahead with this mission in mind. And also on the governance and transparency side, recently you would have seen we rank second as well, our highest ranking to date since this index was started. And we have obtained greater than $9 billion of sustainable financing since 2017. Last part is transformation. As mentioned earlier, our shares were very undervalued over the last few months and even more undervalued now. We have purchased back about 13.5 million shares to a tune of about 80 million, and we continue to watch the market to see when we have opportunities. But as mentioned earlier, I think with the interest rate being so high, I think we do have to put this on pause for the time being. But on the right side, that's our rationale for why we really should be buying shares in our own company. It's one of the best investments and in the business that we should know best. So we are strongly in favour of what we have done on the share buyback side. Fund management side, as I said, right now I think we have built a very sizable portfolio on the global living sector side, as well as we have those three commercial properties in the UK. And we hope to be able to unlock the value and monetize it at some stage. Having all these assets gives us the opportunity, I think, to inject them into listed or unlisted platforms. And obviously, at the same time, we also have two REIT platforms, CDL Hospitality Trust, as well as iREIT Global, both with very different focus. And these continue to be strong growth drivers for us. Obviously, we do need interest rate environment to be a bit more favorable, need capital markets to be a bit more favorable before I can accelerate things a bit further. But we are working already on some new platforms that hopefully we can unveil within the next 12 months if all goes smoothly. And for my last slide, just to give you a flavour of what we have built up over the last few years in the global living sector portfolio. This shows you the breakdown by country as well. So obviously we only have one PRS, Private Rented Sector Project, which is the Sunnyvale one I mentioned earlier. In the UK right now, we have 2,368 student accommodation beds as well as 1,857 PRS units. And in Japan, we have 2,246 across 40 assets with two to be completed this year, physically completed this year. In Australia, we have two build-to-rent projects that will yield 563 units. So I think we are very confident in this sector. Obviously, this sector, aside from Japan, which is still... has a strong spread over borrowing rates over there, but obviously the rest of the countries do come under pressure because of where interest rates are right now, so we do need this to be a bit more of a favourable environment. But suffice to say, I think we built up a very strong and sizable portfolio that opens up a lot of options for us to create new fund management platforms and entities. So we do realize that I think we need to continue to push forward with speed on our capital recycling. It's something that will become part of our business, ordinary course of business, and you will see it year in, year out. So we are trying to accelerate that, but it will take some time, but we are working on that. And I see that as things go forward, I mean, we will start to get into a much stronger capital position and our business will start to be a little bit more asset-light, a little bit more asset-light, and I think that will stand us in good stead for the future. At this stage, I'll pass it over to Yin Ming, who will briefly take you through the financial highlights, and then we'll open it up for Q&A. Thank you.

Thank you, Chairman.