City Developments Limited (CDL) expects to fall into the red in 2020 with a full-year loss, reversing from a $564.6 million net profit in 2019, dragged down by the prolonged impact of the coronavirus outbreak.
It foresees further impairment losses, and British subsidiary Millennium & Copthorne Hotels (M&C) and China-based joint venture Sincere Property Group are set to spill some red ink.
Meanwhile, Deloitte & Touche Financial Advisory Services has completed its review into CDL's investment in Sincere and "ascertained that there are good assets that the group can extract further value (from)", CDL said yesterday.
The group noted in a profit guidance that there have been "signs of improvement and some early results of changes to operations, cost structure and marketing".
Revenue from the group's property development segment this year will be lower than a year ago. Overall profit margins in the first nine months had declined year on year, as more revenue was recognised from mass-market projects on a progress completion basis.
The segment's reported revenue in January to September also decreased by 15 per cent from a year ago, even with a sequential recovery in the third quarter. The segment sold 710 units with a value of $914.1 million during the July-September period, up from the previous quarter's sales of 174 units valued at $240.9 million, CDL said in an operational update yesterday.
The investment properties segment similarly registered a 14 per cent drop in revenue for the first nine months of this year. This came as CDL extended over $30 million of property tax and rental rebates to retail tenants in Singapore and overseas.
CDL's Singapore office portfolio had a committed occupancy of 92 per cent as at Sept 30. Republic Plaza, its flagship office property in Raffles Place, is over 96 per cent leased.
Its retail and food and beverage (F&B) tenants, meanwhile, have almost all reopened for business, except for the entertainment trade. CDL said F&B remained resilient during the latest quarter, with some retailers looking at expansion opportunities.
The hotel operations arm, led by wholly owned M&C, anticipates full-year losses for this year, given the collapse in global travel and tourism amid the pandemic.
This is despite M&C entities' recovery from a loss to gross operating profit in Asia since May and in New Zealand since June, and M&C's global gross operating profit having been positive since July.
For the January-September period, revenue per available room (RevPAR) tumbled 63 per cent on the year while hotel revenue sank 60 per cent.
Global occupancy at its hotels halved to 38.3 per cent, from 74 per cent a year ago.
As for Sincere, in which CDL bought a 51.01 per cent interest this April, the joint venture is expected to be in a loss position again, in the fourth quarter.
For the first nine months of this year, the group had equity accounted for its share of losses in Sincere totalling $76 million, due to lower sales and handover of properties as a result of the Covid-19 outbreak, financing costs and the release of fair-value uplift for the development properties portfolio.
THE BUSINESS TIMES