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Thursday, November 19, 2009

TA Enterprise to acquire another hotel next month

Financial services and property development group TA Enterprise Bhd (TAE) expects to acquire another hotel by next month, said its group managing director and chief executive officer Datin Alicia Tiah.

The planned acquisition comes on the heels of a RM636 million deal to buy over Singapore's Quayside Gem Ltd, which owns the Swissotel Merchant Court in the republic, which is slated to be concluded by the end of this month.

"There will be another hotel acquisition before the end of this year," said Tiah at the company's extraordinary general meeting in Kuala Lumpur yesterday.

The four-star 476-room Swissotel is the fourth property purchase by TAE in the past 12 months.
From December last year to September, TAE paid almost RM515 million to buy properties in Canada, Australia and Malaysia.

Tiah said TAE will spend S$5 million (RM12.15 million) over the next five years to upgrade Swissotel, without disruptions to its hotel operations or bottom line.

She added that the hotel will also be transferred to its property arm TA Global Bhd, which is en route to a listing on the Main Market of Bursa Malaysia on November 23.

"We will transfer Swissotel to TA Global for cash or in exchange of TA Global shares, after the listing," Tiah said.

TAE has folded all its property assets, including Aava Whistler, Westin Melbourne and Radisson Plaza into TA Global prior to the prospectus launch.

On the return on investment on the asset acquisition, Tiah said TAE bought Swissotel with a yield of 7.6 per cent.

"There is guaranteed ebitda (earnings before interest depreciation taxes and amortisation) of S$19 million (RM46.17 million) over the next four years. I believe Singapore will recover and room rates will move upwards next year. These will enhance earnings," Tiah said.

Last year, Swissotel made a net operating profit of S$20 million (RM48.6 million) on revenue of S$53 million (RM128.8 million), with an average occupancy of 78 per cent.

Tiah said the hotel acquisition is expected to bring synergistic benefits to the TA group as it will further enhance TAE's hospitality operations in major cities around the world and increase the company's existing portfolio of hospitality properties.

By Business Times (by Sharen Kaur)

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