City Developments raises South Beach stake to two thirds

It is estimated that CDL could be paying about $150-170 million for Dubai World's one-third stake.

According to DBS, CDL may have exercised its right of first refusal to buy Dubai World's one-third stake in the consortium developing the South Beach project. This means CDL's stake in the South Beach project will now increase from one third previously to two thirds.

The figure takes into consideration the lower site's value since 2007 as well as coupon payments on at least $400m of high-yield secured convertible notes issued by the consortium earlier to CDL and Hong Kong's Nan Fung group.

Back in 2007, CDL, Dubai World and Elad Group teamed up to buy the 99-year leasehold landmark Beach Road site opposite Raffles Hotel from the Urban Redevelopment Authority for $1.69b. Each of them has an equal stake in the consortium.

Separately, it was reported that arrangements have been made for a $1.8b financing package for the consortium, as it gets ready to begin construction of the project this year. The South Beach consortium is expected to utilise $800m of this new facility to repay an earlier land loan on the site granted to it in 2009. Upon completion in 2015, the development will feature 171 apartments, 560 hotel rooms, 632,164 sq ft and 158,014 sq ft gross floor area of office and retail space respectively.