Welcome to this week’s edition of top stock market highlights.
City Developments Limited, or CDL, and IOI Properties Group Berhad (KLSE: 5249) announced a share sale agreement for their joint venture South Beach mixed-use development.
Under this agreement, IOI will acquire CDL’s 50.1% stake in South Beach based on an agreed property value of S$2.75 billion.
This value is a 3% premium over South Beach’s latest valuation of S$2.67 billion as of 31 December 2024.
Based on CDL’s share, the sales consideration amounts to S$834.2 million.
Both CDL and IOI have been joint venture partners in South Beach since 2011.
The property comprises Grade A office space, a 634-room hotel, restaurants, cafes, and South Beach Residences, which consist of 190 luxury apartments and penthouses.
CDL expects that the disposal will result in a gain of approximately S$465 million when the transaction is completed by the third quarter of this year.
The blue-chip property group believes that this divestment represents a strategic opportunity to unlock value from South Beach and will provide it with enhanced financial flexibility to redeploy the proceeds.
The sale also allows CDL to crystallise gains in the property, and proceeds will be used to reduce borrowings to improve its net gearing ratio.
The cash can also be used for new acquisitions, investing in new development projects, or to optimise its capital management.
Such divestments remain a key pillar of CDL’s strategy and involve capital recycling activities that promise to unlock value for its shareholders.
GlobalFoundries is the latest company to announce plans to spend money to bolster its US production.
The Malta-based company manufactures essential chips for semiconductors and electronics makers that handle vital but mundane tasks such as controlling power and managing the flow of data inside devices.
The artificial intelligence (AI) boom increased demand for a variety of chips, boosting the need for power-efficient chips used in data centres and communication equipment.
GlobalFoundries, which is majority-owned by the government of Abu Dhabi, will commit US$13 billion to expand its existing plants in New York and Vermont.
The company will also make a US$3 billion spending commitment to research into advanced packaging and other technologies in the US.
However, CEO Tim Breen did not give a specific timeline on when this amount will be spent, citing the company’s need to be flexible in managing the supply-demand balance.
The investment is driven by higher demand from chip customers who are seeking more local production in an attempt to reduce reliance on suppliers that are concentrated in just one location.
