City Developments—controlled by billionaire Kwek Leng Beng and his family—has agreed to divest the Millennium Hilton Seoul and the adjoining land to South Korean asset manager IGIS Asset Management for 1.1 trillion won ($934 million).
The proposed divestment is in line with City Developments’ strategy to unlock the value of some its long-held assets, the company said in a statement. Upon completion of the transaction in February 2022, the company said it will book an exceptional gain of S$529.7 million ($388 million). Following the news, City Developments shares rose as much as 2.7% to an intraday high of S$7.18 in Singapore.
Located within walking distance of downtown Seoul, the 22-story Millennium Hilton Seoul is operated by Hilton Hotels & Resorts under management contract with City Developments unit Millennium & Copthorne Hotels (M&C). City Developments acquired the 1983 vintage hotel, comprising 680 guest rooms and 29 suites, from the Daewoo Group for $213.5 million in November 1999. It also bought the adjoining freehold land covering 1,563 square meters in 2013 for 29.5 billion won.
“Since acquiring Millennium Hilton Seoul in the late 1990s, we have steadfastly invested in the hotel, driven optimal performance and extracted good value from the property,” Kwek Leng Beng, executive chairman of City Developments and M&C, said in a statement. “We have always believed that this would be an asset that could provide tremendous value to shareholders at the right time and at a right price.”
The sale of the 5-star Millennium Hilton Seoul is M&C’s biggest divestment since the company was taken private by City Developments in 2019. In recent years, the hotel giant has been offloading non-core assets in the U.S. including Millennium Hotel Cincinnati and Copthorne Hotel Birmingham, with the sale of Millennium Harvest House Boulder expected to be completed next year.
M&C owns, manages and operates over 145 hotels in 80 locations worldwide across Asia, Europe, the Middle East, New Zealand and the U.S. While the group’s hotel operations continued to be impacted by the lingering impact of the Covid-19 pandemic, Kwek remains optimistic the industry will recover as travel restrictions ease around the world.
“We remain confident of the global hospitality recovery with pent-up demand,” Kwek said. “We will continue to review and fine-tune our portfolio to accelerate the group’s growth and transformation while enhancing shareholder value.”
Kwek, 80, is also the chairman of Singapore’s Hong Leong Group, which was founded by his father in 1941. His cousin Quek Leng Chan, also a billionaire, runs a separate group in Malaysia, also called Hong Leong. With a net worth of $8.5 billion that he shares with his family, Kwek was ranked Singapore’s eighth-richest person on the list of Singapore’s 50 Richest that was published in August. His eldest son Sherman has been group CEO of City Developments since 2018.