OVERVIEW Expanding Hospitality Horizons Our hospitality arm, led by M&C, continues to be a key growth driver for the Group. Despite the impact of the pandemic, our hotel operations have bounced back in most markets, surpassing pre-pandemic levels, indicating a restored confidence in global travel. In line with the Group’s growth objectives, a key focus of our hospitality portfolio will be on new acquisitions, asset optimisation and capital recycling opportunities. We are enhancing our hospitality offerings and revitalising our assets through asset enhancement initiatives (AEIs) and repositioning. To capitalise on the rebound in global tourism, we acquired three major hotels in Brisbane, Seoul and Osaka, adding 1,080 keys to our hospitality portfolio. The acquisition of the 416-room Sofitel Brisbane Central and the 256-room Bespoke Hotel Osaka Shinsaibashi marks our entry into the Brisbane and Osaka hospitality sectors respectively. Additionally, we re-entered the Seoul hotel market by purchasing the 408-room Nine Tree Premier Hotel Myeongdong II following our divestment of Millennium Hilton Seoul in 2022. These recently acquired properties have achieved strong performance. Driven by the robust recovery of Japan’s tourism industry, the Bespoke Hotel Osaka Shinsaibashi, acquired in August, achieved an impressive occupancy of 91.0% and a remarkable gross operating profit (GOP) margin of 58.5%. Similarly, the Nine Tree Premier Hotel Myeongdong II, acquired in July, saw an 89.3% occupancy with a 29% increase in RevPAR y-o-y. The Group opened three hotels in 2023 that were well-timed to tap into the recovery of the travel industry. These include M Social Suzhou in China (294 rooms), M Social Phuket (former Millennium Resort Patong Phuket) in Thailand (418 rooms) and The Singapore EDITION (204 rooms). Grand Copthorne Waterfront, our 574-room hotel by the iconic Singapore River, was also relaunched in August 2023 after a $30 million revamp of its guest rooms and conference centre. Since the M Social lifestyle brand made its debut in Singapore in 2016, we have continued to expand the brand’s presence across the globe, through both new builds and conversions. Three M Social hotels are in the pipeline for London, New York and California. When completed, these will join the current stable of six operational M Social properties. GROUP CEO’S STATEMENT Sherman Kwek Group CEO Looking ahead to 2024, capital management remains a key focus for the Group. We will adopt a prudent approach to new acquisitions to manage our gearing while proactively pursuing well-timed divestments to recycle capital and unlock value from our asset portfolio, which has been held at cost less accumulated depreciation and accumulated impairment losses. GROWTH Building a development pipeline while strengthening recurring income ENHANCEMENT Enhancing asset value and driving operational efficiency TRANSFORMATION Transforming via strategic investments, fund management and innovation G • E • T Dear Shareholders, 2023 was a memorable year for the CDL Group as we celebrated our 60th Anniversary – a significant milestone. The world and business landscapes have changed tremendously since the founding of the Company and the issues today are far more complex than before as we witness intensified geopolitical tensions and macroeconomic uncertainties. Despite the difficult operating environment, the company's core fundaments remain strong. To stay ahead of the curve, the Group continued to build on our Growth, Enhancement, and Transformation (GET) strategy, which drives superior performance outcomes and lays the foundation for sustained growth. Apart from growing our core development and investment portfolios, one of the highlights of 2023 was our strategic decision to expand our living sector footprint. In FY 2023, we acquired 31 Private Rented Sector (PRS) assets and developments in the UK and Japan. Since our first foray into the sector in 2019, our global living sector portfolio now has a total gross development value (GDV) of $2.6 billion, with 4,800 PRS units and 2,400 Purpose-Built Student Accommodation (PBSA) beds. By building scale in the living sector, which has proven to be one of the most resilient asset classes emerging from the pandemic, the Group is strengthening our recurring income and growing a significant asset base that can be leveraged to create new platforms. Beyond portfolio expansion, the Group focussed on enhancing our existing commercial and hospitality assets through redevelopment and repositioning initiatives. We also made headway in driving enterprise transformation through portfolio harmonisation and optimisation initiatives. We will continue to enhance our operational efficiency, sharpen our value proposition and strengthen our execution, charting a stronger growth trajectory into the future. Developing our Pipeline The Group has strategically focused on replenishing our landbank in Singapore by actively participating in the Government Land Sales programme and exploring redevelopment opportunities within our portfolio to ensure a diverse range of projects and a healthy residential pipeline. The Group’s accelerated expansion into the Living Sector portfolio through acquiring Private Rented Sector (PRS) and Purpose-Built Student Accommodation (PBSA) assets overseas is a complementary and natural progression. These new asset classes will be an additional growth engine for the Group’s asset and fund management capabilities. While headwinds persist, we will embrace 2024 with cautious optimism, confident of our ability to navigate the changing landscape of the real estate sector. APPRECIATION The Board would like to express its gratitude to our shareholders for their unwavering confidence and trust, and has recommended a final ordinary dividend of 8.0 cents per share. Together with the special interim dividend of 4.0 cents per share paid in September 2023, the total cash dividend for FY 2023 amounts to 12.0 cents per share (FY 2022: 28.0 cents per share), representing a dividend payout ratio of 36%. We would also like to thank all our stakeholders – investors, customers, business associates and partners, for their continued support. To my fellow directors, your wise counsel and adept navigation through today’s challenging business terrain are appreciated as we scale new heights of excellence. Finally, to our Management and staff, thank you for your steadfast dedication and invaluable contributions. Our Group is 60 years young and we look forward to your collective support in propelling our company forward. Kwek Leng Beng Executive Chairman OVERVIEW 19 18 ANNUAL REPORT 2023 CITY DEVELOPMENTS LIMITED
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