City Developments Ltd (CDL), a company controlled by billionaire Kwek Leng Beng, has completed the acquisition of the Hilton Paris Opera Hotel for €240 million ($260 million). The historic five-storey hotel, designed by renowned French architect Juste Lisch and opened in 1889, underwent extensive renovation in 2015, costing approximately €43 million. The 268-room hotel is located in the Paris central business district and is within walking distance of popular tourist attractions such as Galeries Lafayette and Printemps department stores.
Kwek, the executive chairman of City Developments, sees the acquisition as an opportunity to enhance the company’s hospitality portfolio with a high-quality asset. He also believes that the purchase will allow them to expand their presence in a key gateway city in Europe, particularly ahead of the Paris 2024 Olympics. With the addition of the Hilton Paris Opera Hotel, City Developments now owns three hotels in Paris, totaling 670 rooms, including the M Social Hotel Paris Opera and Millennium Hotel Paris Charles de Gaulle.
Despite rising interest rates, City Developments has been actively acquiring assets in various locations. In addition to the Hilton Paris Opera Hotel, the company purchased the historic St. Katharine Docks commercial property in Central London last year for £395 million ($500 million). They have also acquired hotel assets in Brisbane, Osaka, and Seoul. However, the company’s profits have been affected by rising borrowing costs, with net profit slumping 75% to S$317.3 million in 2023 despite a 50% increase in revenue to S$4.9 billion.
Kwek, who is also the executive chairman of Hong Leong Group founded by his father in 1941, has a net worth of $11 billion which he shares with his family. He was ranked No. 5 on the list of Singapore’s 50 Richest last September. His cousin Quek Leng Chan runs a separate group in Malaysia called Hong Leong Co. (Malaysia) with interests in finance, food, and property. While CDL’s revenue reached an all-time high in 2023, the company’s profits were impacted by higher financing costs and the absence of substantial exceptional gains from divestments.
The acquisition of the Hilton Paris Opera Hotel from funds managed by U.S. private equity firm Blackstone signifies CDL’s strategic expansion in the hospitality sector. The company believes that this purchase will not only strengthen their presence in Paris but also provide potential for value-add and recurring income. With the upcoming Paris 2024 Olympics, City Developments aims to capitalize on the growing demand for accommodation and hospitality services in the city. Overall, the acquisition aligns with the company’s goal of diversifying and enhancing its asset portfolio in key global markets.
Despite challenges posed by rising interest rates and borrowing costs, City Developments continues to pursue strategic acquisitions to expand its presence and strengthen its portfolio. As a prominent player in the hospitality and real estate sectors, the company’s recent acquisition of the Hilton Paris Opera Hotel demonstrates its commitment to growth and diversification. With the leadership of Kwek Leng Beng and a strong track record of successful acquisitions, City Developments is well-positioned to navigate the current economic landscape and capitalize on opportunities for further expansion and development.
