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Sunday, May 17, 2009

TA unveils Canadian hotel

An artist’s impression of Aava Whistler’s lobby area. The hotel will be soft launched in October and officially opened in November in time for the February winter Olympics. The TA group bought the Canadian 194-room property in December 2008.

TA Enterprise Bhd will officially open its Aava Whistler Hotel in Canada, after a C$33mil refurbishment, making this its first hotel on Canadian soil. It has two hotels in Australia, which are also undergoing refurbishment this year at a total cost of about A$4mil.

Tiah... we are on the lookout for other hotel acquisitions over the next two years.

Its group managing director and chief executive officer Datin Alicia Tiah says the company will be on the lookout for other hotel acquisitions over the next two years with a preference for those in the central business districts (CBDs) in large cities, particularly in Hong Kong and Singapore.

Tiah says she ventured into the hotel business in 1997 by default. In retrospect, there are no regrets, she says.

The Radisson Plaza heritage building needed a bit of work but the effort is well worth it.

The global downturn has resulted in a 10% to 15% drop in room rates and occupancy for its Sydney hotel.

Despite that, the Radisson contributed about 15% to the group’s revenue in financial year 2008 and 2009.

TA bought the Sydney hotel for A$115.5mil. Radisson generated sales of RM73mil in 2007, RM82mil in 2008 and is expected to bring in RM77mil in the current financial year which ended on Jan 31.

“I learnt a lot of things from that first project – the operations and management of a hotel business, the long gestation period and the importance of recognising an opportunity when it comes,” Tiah says. Although she likes hotels in CBDs, Tiah remains open to opportunities in different categories of the hospitality industry.

“We purchased the Coast Whistler because I know the place. I go there for my skiing holidays and I am familiar with the area and the hotel business there. Most of them have multiple owners who lease the units back to the operator.

“With Coast Whistler, it was different. It was a little boutique hotel with about 190 rooms and there were no multiple owners,” she says.

Located at the base of world’s renowned Whistler and Blackcomb Mountains in British Columbia, the Coast Whistler is popular with winter sports enthusiastics. Since the purchase, she has renamed it Aava Whistler Hotel. It will be opened in time to tap the winter Olympics in February 2010, using the same strategy as its Radisson Plaza hotel in Sydney.

TA bought the Canadian hotel for C$33mil at the height of the global downturn in December 2008.

TA will also be operating its sole food and beverage outlet, White Spot, a franchised chain fairly similar to TGIF.

“Upon acquisition, the hotel business needs two to three years to be profitable. But because there is always a demand for rooms during the Olympics – in Sydney in 2000 and in British Columbia in 2010 – we are able to tap into that market the first year charging premium rates. We will do well for the first year because of these major events and we’ll just let the second and third years look after themselves,” says Tiah.

In April, the group concluded its Westin Melbourne deal at a cost of A$160mil.

Tiah says the 262-room five-star luxury hotel is a jewel in terms of location. It is sited at the corner of Collin and Swanston streets. Its occupancy in March was 80% with room rates at about A$300 a nite.

By The Star (by Thean Lee Cheng)

TA Enterprise to list property unit by October

The property business, TA Global Bhd, will have a paid-up capital of RM1.5 billion and RM2.4 billion in assets

TA ENTERPRISE Bhd (TAE), a property and financial services firm, is targeting to list its property business on the Main Market sometime during end-September or early October, its top official said.

The property business, known as TA Global Bhd, will be one of Malaysia's largest property firms with RM2.4 billion in assets, managing director and chief executive officer Datin Alicia Tiah said.

It will have an issued and paid-up capital of RM1.5 billion.

"If everything goes well, we can issue the prospectus in one month's time. It all depends on how soon we get approval from the Securities Commission," she told reporters at a briefing yesterday.
The move will essentially see TAE holding all of the group's financial services businesses and TA Global holding the property-related assets.

The reason for doing this is to unlock TAE's value for shareholders, Tiah said.

TAE's board also announced yesterday a first and final dividend of 4.5 per cent less tax for the fiscal year ended January 31 2009.

Holders of its TA Warrants 1999/2009 will be entitled to the dividend if they exercise the warrants into TAE shares before the warrants expire on June 24 this year.

As part of the proposed listing scheme, those who exercise the warrants before the expiry date will become TAE shareholders and also obtain TA Global shares and irredeemable convertible preference shares (ICPS).

TAE is proposing that shareholders get three TA Global shares and three ICPS for every five TAE shares held. This, however, is just an indicative ratio, Tiah said.

If all the warrants are converted, TAE will end up holding 38 per cent of TA Global, allowing it to equity account the business.

Among the properties that TA Global holds are development projects such as Damansara Idaman, Idaman Villa, Seri Suria and Nova Square.

Its property holdings include Menara TA One in Kuala Lumpur, Terasen Centre (Vancouver), Radisson Hotel (Sydney), Aava Whistler hotel (Whistler, Canada) and Westin Hotel (Melbourne).

Once the listing is done, the TAE group - one of the largest landbank owners in the vicinity of the Kuala Lumpur City Centre - may decide to set up retail, office and hospitality property trusts. This may be done with a third party, Tiah said.

On another front, Tiah said that plans for TAE to obtain an investment banking licence had been put on hold.

The group is cash-rich, with more than RM200 million currently.

By Business Times (by Adeline Paul Raj)

Bargain hunting in downturn

The commercial markets are still holding up fairly well, especially on the income-generating assets or investment grade properties in both the retail and office segments.

Regroup Associates Sdn Bhd executive director Paul Khong says, however, that market activities are relatively slower this year and are` expected to continue through the end of the year.

“Most buyers are looking out for good bargains. It is really a buyers’ market now but many are taking a conservative stand on major purchases although they can afford it. They intend to wait a little longer,” he says.

He adds that there are still local buyers who are looking around for deals, and expectation of yields/returns is now slightly higher due to current market conditions.

“Cash is king again,” he says.

DTZ Nawawi Tie Leung Property Consultants Sdn Bhd executive director (research and consulting) Brian Koh says the investment market had made a turn for the worst in the first quarter of this year against the unfolding of the global economic crisis which began in the United States.

“Most institutional funds stayed by the sidelines as the market struggled to find a new price level in the midst of high volatility in the capital market,” he says.

And although Bank Negara is expected to continue to ease monetary policy to boost the economy, Khong does not expect new funding to be easily available or cheap.

“The market has been relatively slow with few or no major transactions. While the number of deals remain the same as in quarter four last year, total investment value for the quarter is only RM113mil compared to RM466mil in the previous quarter,” he says.

Based on the latest report by DTZ, it says that there are two mid-sized office transactions in this quarter with relatively high prices and low yields and both are purchased by the government-link-companies.

Perbadanan Nasional Bhd bought Wisma Glomac 3 while EXIM Bank purchased Menara Bank Industri.

“The transaction prices range from RM469 psf to RM639 psf, and do not seem to be affected by current realities. The net yields are 5% and 5.3% respectively,” it says.

Based on that, the report points out that demand for office space has softened with slow leasing enquiries for office space in the first quarter this year.

Prime office space continued to experience declining rents for the second consecutive quarter, which eased 2.85% quarter-on-quarter to RM6.14 psf per month.

The office market is expected to experience continued pressure on rental rates due to the large stock of incoming supply of new office buildings during the year.

With 4.13 million sq ft expected to be completed this year and 6.55 million sq ft more hitting the market in 2010 and 2011, developers are more likely to defer their planned projects, according to the report.

However, it says that despite slower demand and increasing supply, the occupancy level is still holding up well.

Grade A space in the city centre remains resilient at an average occupancy of 95% compared to 90% in quarter four of 2008.

The report says this is mainly attributed to Kuala Lumpur’s tight supply of prime space, coupled with the fact that Kuala Lumpur has benefited from strong, broad-based demand from a wide spectrum of growth sectors such as oil and gas, Islamic finance and other domestic-driven activities.

Touching on the retail side, Koh says the retail sector continues to see some investment activities, as the sale of basic household necessities is believed to still have room for growth.

“The market saw AEON Co (M) Bhd, the Japanese operator of Jusco stores, entering into a sale and purchase agreement for a piece of land together with a proposed retail centre at Bandar Sri Permaisuri for RM107.2mil.

“This acquisition represented the continued aggressive expansion of Jusco in Malaysia in its attempt to accelerate its retail business to compete with the hypermarkets,” he says.

With price declines and yields becoming more attractive in the major regional financial centres, offshore funds are finding these cities more attractive and are thus bypassing the Malaysian market for the time being.

“While there are some opportunistic funds actively scouting the Malaysian market for distressed assets, to date there has been no fire sale,” he says, adding that with prices in Kuala Lumpur showing no sign of a major decline, potential buyers, especially foreigners, are happy to stay sidelined until better opportunities surface.

“This is expected to be in the second half of the year as the recession bites harder. The market is likely to consolidate slowly in the next two years with new supply and economic factors being the key drivers of values and activities,” Koh says.

By The Star (by EDY SARIF)

Beefing up Malaysia’s quality of life index

Much more can be done to ensure Malaysian cities move up the ranks of the world’s cities and be a beacon to attract high net worth individuals and skilled professionals to set up homes.

In a recent study by Mercer, a global provider of consulting, outsourcing and investment services, Kuala Lumpur ranked 75 in the 2009 quality of living global city rankings based on a categorised point-scoring index covering 215 cities.

Singapore, which ranked 26, was the top scoring Asian city followed by Tokyo at 35.

Singapore’s high quality houses and apartments, and wide range of international and private schools to cater to its expatriate community, have been cited as contributing factors.

As a city that boasts an airport with excellent facilities and connections as well as an efficient and extensive public transport network, the republic scored the highest worldwide for its city infrastructure.

Beijing also moved up three places in the rankings, from 116 to 113, largely due to improvements to public transport facilities following the Olympic Games last August.

Knight Frank’s World Cities Survey placed Kuala Lumpur at 34 out of 40 cities surveyed recently.

Its ranking of the world’s leading cities is to provide an accurate measure of the locations that matter to wealthy individuals choosing first or second homes.

Besides economic success, the ranking for a world city is based on the attractiveness of its built and natural environment, its universities, freedom for think tanks and political activists to discuss and disseminate ideas, freedom of the press, safety and maintenance of public spaces, and facilities for wholesome recreation. Although Malaysia can pride itself for its strengths and assets, it should also work on overcoming its weaknesses and shortcomings, and in the process, raise the quality of life index for the people.

Among its assets include a highly resourceful, talented and educated population who have shown their strength, readiness and resilience in facing the good and bad times including the latest bout of global economic upheavals, well-developed infrastructure facilities, rich natural resources, and strong intellectual development capability.

Compared with many other higher cost countries, Malaysia can also boast of its relatively high standard of living at lower costs, cultural diversity, and racial harmony.

It should also leverage on its strength as one of the most politically stable countries in the region by ensuring both the federal and state governments cooperate and work together to ensure projects and policies are efficiently implemented and executed for the people’s well-being.

Kuala Lumpur and Penang are already the top favourites for the expatriate and international communities as they are home to quite a number of multinational corporations and regional offices.

It will be good for other cities around the country to make use of their comparative advantages to share the popularity spotlight.

There is still much work to be done to beef up the overall quality of life index, including curbing crimes to ensure personal safety and security, and sprucing up the living environment with better quality public projects and facilities and housing schemes.

There is also a need to ensure that more environment-friendly and sustainable projects are built to maintain the natural environment as much as possible.

The quality and designs of projects also need to be beefed up to international standards and promote more Malaysian-themed architecture.

Much has been said about the inadequacies and shortcomings of the public transport system in the various cities including Kuala Lumpur, Petaling Jaya and Penang.

It is high time that the various modes of public transportion, including the light rail transit system, buses and taxis, complement each other so that more city folks will use the facilities. This will only happen if the public transport system is greatly enhanced and is highly complementary.

With so much at stake, it will certainly do much good for Malaysia’s international ranking if the necessary efforts are expended sooner than later.

·Deputy news editor Angie Ng hopes that Malaysians of all creed and from all corners of the country will join hands in every endeavour in the spirit of 1Malaysia.

By The Star (by Angie Ng)

Govt ready to help Sime with Eagle Cove project

The Federal government is ready to help Sime Darby with the development of the RM7.5 billion Eagle Cove project in Pantai Kok in Langkawi, Kedah.

Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcob said the project is to be developed under four phases encompassing the construction of a hospital, residential area, resort, a convention centre and an international standard commercial complex.

He said the project, to cover over 160 hectares, is expected to take 10 years for development and could make Malaysia a second home for foreigners once fully completed by Sime Darby Property.

"The Federal Government will be discussing with the state government of Kedah if there are areas involving the state government," he told reporters after attending a briefing in Langkawi yesterday on the project by managing director of Sime Darby Property Datuk Tunku Putra Badlishah.

Nor Mohamad said the project is expected to create 3,000 job opportunities for the locals.

By Bernama

MBSB targets 25% growth in retail loans

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) intends to achieve this year’s headline key performance indicators (KPIs) for retail loans growth of 25%, chief executive officer Ahmad Zaini Othman said.

“We also want to maintain, if not improve, operating profits from our core business. In the present economic conditions, our strategy is to stay focused on core activities, be selective, and manage business risks,” he told StarBizWeek in an interview.

Personal financing, for instance, is relatively safe as MBSB’s loans are offered to civil servants.

“The level of NPLs (non-performing loans) in this segment is unlikely to rise given that civil employment is stable and loans repayment is auto-deducted from monthly salary,” Zaini said, adding that NPLs in the segment amounted to less than 1%.

The response to MBSB’s personal financing promotions is overwhelming, with the police force campaign now extended for the second month. “The last 30 days of campaigning has led to a bumper period for us that exceeded expectations,” he said.

The offer includes attractive rates, Takaful protection and holiday packages. MBSB’s target is to achieve RM100mil personal loans a month and RM1.2bil annually.

“At the present pace, personal financing should be able to book RM1.2bil to RM1.5bil annually. In the next two to three years, it will overtake mortgage in forming the bulk of net loans,” he added.

Zaini said the attractive rates were offered, as “we shouldn’t be reaping huge profits at the expense of the civil servants.”

MBSB recently launched its Musharakah Ventures Programme, which is an Islamic partnership model based on profit sharing to be implemented in property, contract and project financings.

The downside risk to Musharakah is mitigated by the high involvement of partners in ensuring the project’s success.

A project management and monitoring team has been established to access property development, projects and contracts that are viable for the Musharakah programme based on viability and the partner’s track record.

“The team comprises individuals from engineering, quality surveyor and technical background with banking exposure. They evaluate operational risks instead of credit risks that banks normally consider,” he said, adding that the minimum value of a project was RM10mil.

The programme is likely to contribute to part of this year’s targeted asset base growth of 15%. “We want to play safe first and tap our existing clients, who are mainly in property development. Government-related projects also have potential given the high certainty of cashflow and payment,” he said.

Contrary to perception, MBSB’s present involvement in financing property development is not the same as in the 1990s, when the group set up a property development subsidiary. The venture failed and it had to be rescued by its shareholder, the Employees Provident Fund.

That failed venture could be due to “relaxation in evaluation of projects and lopsidedness in contract terms,” Zaini said.

“We want to emphasise that we’re not setting up a property development business, as it is not our forte. Instead, we’re capitalising on the expertise of our clients and offering them financing while mitigating the risk by closely monitoring the project’s progress,” he added.

Zaini took office less than three months ago and in the short span of time, has introduced new policies, streamlined guidelines and concised the company’s standard operating procedures.

The business model at branches was changed and the position of regional business representative was created in the five regions nationwide.

“The representatives are responsible for the strategic planning of their respective regions. Given that some 50% of the business is from outside of Selangor and Kuala Lumpur, their role is to initiate and bring in new businesses,” Zaini said.

By The Star (By Yeow Pooi Ling)