Metropolis Developments—managed by billionaire Kwek Leng Beng—stated Friday the property developer will report additional losses within the first half this yr amid the lingering affect Covid-19 lockdowns and monetary troubles at Chinese language subsidiary Honest Property Group.
“Although indicators of enchancment are evident throughout the group’s enterprise segments, the extended Covid-19 pandemic has led to the reinstatement of tighter measures, together with journey restrictions and intermittent lockdowns to include the outbreak,” the corporate stated Friday in a press release to the Singapore Change. “These challenges proceed to affect operations, notably inside the group’s hospitality enterprise at its wholly owned subsidiary Millennium & Copthorne.”
Ongoing monetary troubles at unit Honest Property, which is dealing with chapter claims in China from one among its collectors, can also be dragging Metropolis Improvement’s general efficiency. The Singapore-based actual property large stated its earnings are additionally being dampened by greater financing prices and the dearth of curiosity earnings from loans prolonged to the cash-strapped Chinese language subsidiary.
Metropolis Developments wrote off S$1.78 billion ($1.3 billion) from its investments in Honest Property final yr, driving the group to report a internet lack of S$1.9 billion for 2020, its worst-ever monetary efficiency. The corporate stated its present monetary publicity to Honest Property stands at S$117 million and all its curiosity receivables from the Chinese language unit have been impaired.
Nonetheless, Metropolis Developments stated it expects to report a internet lack of as a lot as S$35 million within the six months ended June 30, in contrast with a internet revenue of S$3.1 million the yr earlier than. The corporate will launch particulars of its first-half monetary efficiency on August 12.
“The periodic lockdowns throughout quite a few cities to sluggish the unfold of the extra infectious Delta variant for the reason that begin of 2021 has inhibited restoration,” Metropolis Developments stated in a press release. “The resort portfolio is predicted to register an operational loss.”
Metropolis Developments business properties has additionally been impacted by the pandemic, with foot visitors at its buying malls declining and the corporate offering rental rebates to affected retail tenants.
However the difficult enterprise atmosphere, Metropolis Developments stated it has a wholesome monetary place, with adequate liquidity to satisfy its operational and monetary commitments. The corporate stated it had complete money and undrawn financial institution amenities amounting to S$4.4 billion as of June 30.
Metropolis Developments took a controlling curiosity in Honest Property in April 2020 because the Covid-19 pandemic began to wreak havoc on the worldwide financial system. The funding had sparked a disagreement between firm chairman Kwek Leng Beng and his cousin, Kwek Leng Peck, who stepped down from the corporate’s board in October. In December, two unbiased administrators—who additionally disagreed with the funding choice—resigned.
Kwek, 80, can also be the chairman of Singapore’s Hong Leong Group, which was based by his father in 1941. His cousin Quek Leng Chan, additionally a billionaire, runs a separate group in Malaysia, additionally known as Hong Leong. With a internet value of $3 billion, Kwek was ranked Singapore’s Twelfth-richest individual on the World’s Billionaires Record that was printed in April. His eldest son Sherman has been group CEO of Metropolis Developments since 2018.