TA ... Jan 2009

As global stock market tumbled in 2H2008, TA seems to have become more aggressive in growing its property business, an effort that may help mitigate the fall of earnings in its stockbroking business.

In Oct 2008, after TA announced plans to acquire Coast Whistler Hotel in British Columbia , Canada , for C$33 million cash, it entered into another agreement in mid-Dec 2008 to buy The Westin Melbourne in Australia for A$160 million.

On financing, the company is securing a loan and a few banks have expressed interest in funding the proposed acquisition of The Westin Melbourne. TA intends to bowwor A$60 million to partly fund the purchase.

Unlike the Coast Whistler Hotel, which is being acquired directly by TA’s soon to be listed property investment arm TA Global Bhd. The Westin Melbournce is being acquired by TA’s newly established wholly owned subsidiaries TA Covenant Ltd and Ascents Hotel Pty Ltd.

The company has not made a decision on whether The Westin Melbourne will be injected into TA Global post listing. TA received approval from the Sc in Nov2008 for the listing of TA Global. It has until May 2009 to list the unit.

Financial Results …
For the first nine months of FY2008 ended Oct 31, 2008, the property business has overtaken stockbroking as the largest earnings contributor to the group, compares with a year earlier. Its property development segment saw a whopping 177% year on year increase in operating profit to RM125 million.

On the face of it, TA is forking out A$160 million for an investment that yields 7.6%. But going forward, what TA plans to do with its overseas assets is something that would be watched by investors of this stock broker cum property developer.


At end Oct 2008, TYA had cashed of Rm400 million, while its total borrowings stood at RM117 million. If the company borrows A$160 million and uses its cash reserves to pay for the reaming A$100 million for The Westin Melbourne Hotel, it would still have some Rm160 million. With such a cash position the company is certainly in a comfortable position to acquire more assets.