SINGAPORE (Feb 28): City Developments reported a 23.4% fall in 4Q17 earnings to $186.7 million while FY17 earnings came in 17.6% lower at $538.2 million.

In mitigation, CityDev says FY16 earnings of $653.2 million were boosted by contribution from Hong Leong City Center (HLCC) in Suzhou, higher margin projects like Coco Palms, D’Nest and Lush Acres EC, divestment of its 52.52% stake in City e-Solutions, sale of Exchange Tower and the recapitalisation of Summervale Properties which holds Nouvel 18.

Despite a challenging operating environment, CityDev reported 4Q17 revenue increased by 13.8% to $1.3 billion while revenue for FY17 remained stable at $3.8 billion. 4Q17 revenue was boosted primarily by contribution from The Brownstone EC which obtained its TOP in Oct 2017, enabling revenue and profit to be recognised in entirety upon completion.

FY17 revenue contributors include the strong takeup for Gramercy Park, sales from existing property development projects such as The Venue Residences, Coco Palms and HLCC in Suzhou, and contributions from the group’s investment properties.

Revenue growth from the hotel operations segment was enhanced primarily by the full-year contributions from certain hotels within the group’s listed subsidiary, Millennium & Copthorne Hotels plc (M&C), notably Millennium Hilton New York One UN Plaza which re-opened in September 2016 after refurbishment and Grand Millennium Auckland which was included in September 2016.

Pre-tax profit was distorted by one-off items, says CityDev. Property development segment continued to be the highest contributor, making up 81% and 57% for 4Q17 and FY17 respectively.  This segment benefited from the partial divestment of the group’s interest in two China projects in Chongqing to China Vanke Co. for $55.5 million. The rental properties segment also included a gain following the sale of an office building in Osaka while the hotel operations segment included a writeback of impairment losses on loans to a JV of $22 million.

As announced on Feb 27, CityDev and its JV partner submitted the top bid of $509.37 million -- or $583 psf ppr -- for Sumang Walk EC site in Punggol Town. The 291,235 sf site is within 100 metres to Sumang LRT station and 550 metres to Punggol LRT/MRT station and bus interchange. If awarded, the JV will explore an EC project with around 820 units.

Sherman Kwek, CityDev Group CEO, says, “We are privileged to have clinched multiple attractive land sites over the past 12 months and we will continue to strengthen our landbank in Singapore as well as overseas. In addition to growing our property development business, we will focus on enhancing our asset management capabilities and driving greater operational efficiency within the business. To supplement our recurring income streams, we will also look towards the creation of a sizable and sustainable fund management business. We are strongly embracing innovation within the company and will continue to invest in new economy and technology ventures that will transform our key product offerings and services.”

The board is recommending a special dividend of 6 cents per share, in addition to the final dividend of 8 cents per share. This brings total dividends for FY17 to 18 cents per share, up 2 cents from a year ago.

Shares in CityDev closed at $12.73 on Tuesday.

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