City Developments, controlled by billionaire Kwek Leng Beng, said on Friday that the real estate developer will report further losses in the first half of this year due to the Covid19 lockdown and the persistent financial difficulties of Chinese subsidiary Xincheng Real Estate Group.
“Although there are clear signs of improvement in various business units of the group, the prolonged Covid19 pandemic has led to the resumption of stricter measures, including travel restrictions and intermittent closures to contain the epidemic,” the company told the group this Friday Said. in a sentence. Singapore Stock Exchange. “These challenges continue to affect operations, especially the hotel business of Millennium & Copthorne, a wholly owned subsidiary of the group.”
Xincheng Real Estate faces a bankruptcy claim from a creditor in China, and its ongoing financial troubles have also dragged down the overall performance of urban development. The Singapore-based real estate giant said its earnings have also been affected by rising financing costs and insufficient interest income from loans to underfunded Chinese subsidiaries.
City Developments canceled S $ 1.78 billion (US $ 1.3 billion) of its investment in Xincheng Real Estate last year, leading the group to report a net loss of S $ 1.9 billion for 2020, which is its worst. financial performance. The company stated that its current financial exposure to Xincheng Real Estate is S $ 117 million and that all interest receivable from its Chinese division has deteriorated.
Despite this, City Developments stated that it expects to have a net loss of up to S $ 35 million in the six months ending June 30, compared to a net profit of S $ 3.1 million in the prior year. The company will release detailed information on its financial results for the first half of the year on August 12.
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. “Since early 2021, periodic closings in many cities have slowed the spread of the more contagious Delta variant, which inhibited recovery,” stated City Developments in a report.
“The hotel portfolio is expected to experience operating losses.” Commercial properties at
City Developments have also been affected by the pandemic, and pedestrian traffic in its shopping centers has decreased. The company offers rent refunds to affected retail tenants.
Despite the challenging business environment, City Developments stated that its financial position is sound and that it has sufficient liquidity to fulfill its operational and financial commitments.
The company stated that as of June 30, its unused cash and banking services totaled S$4.4 billion. In April 2020, when the Covid19 pandemic began to cause severe damage to the global economy,
City Developments acquired a majority stake in Xincheng Real Estate. This investment triggered a disagreement between the company’s president Kwek Leng Beng and his cousin Kwek Leng Peck, who resigned from the company’s board of directors in October. In December, two independent directors who also disagreed with the investment decision resigned.
Kwek, 80, is also the chairman of the Hong Leong Group of Singapore, which was founded by his father in 1941. His cousin, Guo Lingcan, is also a billionaire and runs an independent group in Malaysia, also called Hong Leong. With a net worth of US $ 3 billion, Guo was ranked 12th richest person in Singapore on the list of world billionaires released in April. Since 2018, his eldest son Sherman has been the Group CEO of City Developments.