REAL estate group UOL has announced a 373.9 per cent leap in net profit to S$572.7 million for its fiscal second half ended Dec 31, 2023, on a S$442.3 million gain from the sale of a wholly owned subsidiary that held Parkroyal on Kitchener Road.

Before fair-value and other gains, the mainboard-listed group’s half-year profit was down 12 per cent to S$145.5 million, from S$164.5 million in the year-ago period, it disclosed in a bourse filing on Tuesday (Feb 27).

The results translate to earnings per share (EPS) of S$0.6778, against EPS of S$0.1431 in H2 FY22. 

Overall, the full-year profit was up 43.9 per cent, at S$707.7 million, from S$491.9 million in the previous year. With this, the board proposed a special dividend of S$0.05 per share on top of a first and final dividend of S$0.15 per share.

Commenting on the proposed dividend amount at a briefing on the company’s financial results on Tuesday, Kwa Bing Seng, the chief financial officer of UOL, said that although the group had gained a “handsome amount” from the divestment of the Parkroyal hotel, it decided that it was in the best interest of UOL to channel the bulk of the sale proceeds to pare down its loans instead.

He noted that although the government had forecast GDP growth of between 1 and 3 per cent for 2024, there were “a lot of factors” that could derail that growth. The company thus wanted to approach its business with “a little more caution”.

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The group said its H2 revenue was down 21.1 per cent to S$1.3 billion, as takings from property development tumbled by 45 per cent or S$443.4 million on lower contributions from its Avenue South Residence, Park Eleven Shanghai, The Tre Ver and Clavon properties.

The drop was partially offset by higher progressive revenue recognition from AMO Residence and The Watergardens at Canberra, it stated.

Revenue from hotel operations rose, however, by 21 per cent or S$73.5 million, as the group’s hotels – except for those affected by major refurbishments – continued to benefit from a rebound in global travel in their respective countries post-Covid.

Speaking at the briefing, Choe Peng Sum, the chief executive officer of Pan Pacific Hotels Group, said that at 68 per cent, the FY2023 occupancy rate for hotels owned by UOL in Singapore may not appear to reflect a rebound in the hospitality sector. The occupancy rate for this segment was slightly higher in FY2022, at 70 per cent.

However, he said the figure came from lower occupancy as a result of renovation work in Pan Pacific Singapore and Mandarin Oriental Singapore; it also took into account the sale of Parkroyal on Kitchener Road and the opening of Pan Pacific Orchard last year.

Without these, the occupancy rate for FY2023 would have been 87 per cent, said Choe.

H2 investment income grew by 42 per cent or S$10.5 million, on higher dividends received from quoted equity investments. Finance income grew 9 per cent or S$1.8 million on higher deposit rates and interest income from loans to a joint venture company.

The group’s finance expenses in the half grew 30 per cent or S$24.8 million, however, as interest rates rose. The weighted average interest rate on external borrowings for the group for H2 FY23 came in at 3.87 per cent, versus 2.87 per cent in the year-ago period.

For the full year, revenue dipped by 16.2 per cent. The group attributed this to lower revenue from property development, but said this was partially offset by higher takings from hotel operations, which rose 38 per cent or S$208.7 million in the year.

Nevertheless, UOL group chief executive Liam Wee Sin said sales in the company’s Singapore residential projects exceeded expectations amid a challenging economic environment, and following two rounds of cooling measures.

Noting that Watten House, its condominium development in Bukit Timah, performed especially well, given its 64 per cent in sales bookings last year, he said there remains strong demand for good products in attractive locations.

Ongoing asset enhancement initiatives under the group’s office and retail portfolio will contribute incrementally to its bottom line, he added, pointing out that positive rental reversions were achieved.

On the rental reversions in its office portfolio, Liam said at the briefing that Singapore stood out as a “safe haven” against the backdrop of rising geopolitical tensions, as well as the easing of interest rates and inflationary pressures in H2 of 2023. 

“The outlook (for office rentals) is supported by the attractiveness of Singapore as a regional headquartering hub for global MNCs and an international wealth hub,” he said.

Liam also stated that Singapore’s hospitality sector is likely to continue its growth against the backdrop of the recovery in travel.

He said that UOL will capitalise on its newly refurbished and newly opened hotels as global travel takes off, and that the company will target the higher luxury segment.

Office rents are likely to moderate, however, due to a new pipeline of offices and more companies may right-size their office in view of economic uncertainties, he said.

But he added that cyclical demand could improve alongside the expected recovery in Singapore’s economy.

On the residential market, Liam said he expected it to grow in 2024, but more slowly. He said that demand will continue to be backed by a “resilient household balance sheet” as well as high employment rate.

The group announced Wee Ee Lim’s appointment as the chairman of its board, succeeding his father Wee Cho Yaw, who died on Feb 3.

The younger Wee is concurrently president and chief executive officer of Haw Par Corporation, which created Singapore’s famous Tiger Balm ointment.

Shares of UOL closed at S$6.01, down S$0.10 or 1.6 per cent on Tuesday, before the release of the results.