A deal with Donald Trump puts Tiah Joo Kim in the limelight
Tiah Joo Kim may hardly be a familiar name in Malaysia’s corporate circles, but that may soon change.
For one, the 36-year-old son of tycoon Datuk Tony Tiah was recently appointed chief executive officer of their family-owned TA Global Bhd, marking his entry into the 2009-listed company for the first time.
But beyond that is a more sensational reason that is putting him in the spotlight, and that is his business partnership with Donald Trump by way of TA Global’s Trump International Hotel and Tower Vancouver development in Canada.
Trump is presently the de facto Republican presidential nominee for the presidency of the United States in the 2016 election.
Jointly developed by TA Global Bhd and Canadian property player Holborn Group, the residential portion of the 63-storey mixed use tower has sold at a record high per sq ft (psf) for a condominium project in Canada, at an average US$1,610.
The Trump group will manage the serviced resideces of the development costing some 360 Canadian dollars (RM1.1bil), which comprises a luxury hotel with 147 guest suites, 217 high-end residential units, a 4-level podium and an 8-level underground carpark – all of which slated for completion in June.
“We approached Trump to manage the serviced residences for several reasons.
“Firstly, they are a young and dynamic company, flexible in terms of their brand standards. Unlike most other branded residences, who can be traditional and set in their ways, the Trump team are developers themselves who understand what is relevant to the market,” Joo Kim tells StarBizWeek in an interview.
“Behind the Trump brand is a family business just like mine, so I can trust their longetivity in the business. I’ve been so impressed by them from our dealings with them. Like our family, they have children who are being groomed to take over the business and they are so respectful of their father,” says Joo Kim.
“Sometimes it’s hard to imagine why the western media spins such notorious stories about Donald Trump. He’s an extremely smart businessman with a wonderful family and we connect on that level.
“We are dealing with them because a hotel management business is long term, easily spanning the next 23-30 years. With the strong inter-family relationship, this is unlike executives who are hired to run a hotel business. They leave, but the Trump’s second generation leaders are here to stay.”
In general, TA Global’s Canadian operations comprising property development, hotel operations and property investments, have contributed some 70.3% in earnings to the group.
“I wanted a brand that would get me a lot of attention so that the public would, in turn be impressed with me knowing that I am responsible for the product.”
The Trump Tower, which took two years to sell out in the current economic climate, raked in residential sales of RM46.4mil.
Commenting on a recent news report that alleged that TA Global had sold Trump Tower, Joo Kim vehemently denies this: “The story has been spun just to create a sensation!”
As for the rest of TA Global’s new developments, Joo Kim says he intends to beef up their interational assets, which at the moment stands at a quarter of the groups total assets, the remaining being Malaysian projects.
“We will continue to look for assets internationally to add to our recurrent income business, such as hotels or other commercial buildings. We always want to have a balance between income holding assets and development projects because the development game takes so long and is subject to price and market fluctuations,” he says.
“Income holding assets also makes it easier to get financing with the banks for expansion plans.
“In the longer term, we will entertain ideas like launching a REIT or a development fund when we feel and believe that we our team is ready to take on this next phase of expansion.”
TA Global is currently rolling out some RM3.1bil worth of projects in gross development value in Malaysia and overseas.
In Canada, beside and connected to the Trump Tower, is TA Global’s investment in an 18,000 sq ft glass structured conference facility at the FortisBC Centre, which is scheduled for an opening in early July. Upon completion, it will be leased to the Trump building.
The conference facility is expeted to enhance the income yield of the FortisBC Centre and Trump International Hotel and Tower Vancouver.
In Sydney, Australia, TA Global is actively marketing its Little Bay Residential Development, a 13.6 ha rare ocean front land for A$755mil. With 582 houses and apartments, 45 units of luxury apartments named Solis which have been fully sold, the project is the group’s maiden foray into residential development in Australia.
The company draws confidence from the fact that Australia’s record low interest rate of 2% and its lower dollar would potentially continue to attract foreign buyers investing in offshore capital.
“Baring any unforseen circumstances, we expect a yield of 6% from the Trump Tower when stabilised. Based on the financial year ended December 31, 2015, the recurring revenue from our overseas properties was approximately 78% of the group’s total revenue.
“Going forward, we expect the recurring revenue of our hotels to improve by approximately 25% with the contributions from Trump Hotel and when existing renovations of our hotels completes and with the expected stronger tourism markets in Australia, Singapore and Thailand.
Elsewhere overseas, TA Global also has hotel operations in Movenpick Resort & Spa Karon Beach in Phuket, Thailand, Radisson Blu Plaza Sydney and The Westin Melbourne in Australia, The Swissotel Merchant Court Singapore, Swissotel Kunshan, China, and Aava Whistler Hotel in Canada.
With such well branded hotels in its stable, it is possible that TA Global may divest some of its hotels at the right price, a notion that Joo Kim does not discount, without elaborating.
Even with its widespread global operations, the company’s bread and butter still comes from its local projects at this point, which contribute 75% of the RM3.1bil GDV being rolled out over the next 18-24 months, with the remaining 25% coming from overseas projects.
With a local land bank of 716 acres, and 34 acres overseas, the group’s Malaysian developments include the next phase of Ativo in Sri Damansara and its Dutamas development as well as a yet-to-be named building next to the group’s Menara TA in Kuala Lumpur, with GDVs of RM450mil, RM482mil and RM1.4bil, respectively.
Addressing the softening of the local property market, Joo Kim is of the belief that the situation is only temporary and not due to “any major structural problems in the economy”.
“We have an oversupply at the moment, but the properties will be taken up in time by the high demand of the growing city. I do believe that projects that are strategically located, that are brilliantly designed and priced right, will always sell,” he says.
For the fourth quarter ended December 31, 2015, TA Global reported a net profit of RM30.9mil on the back of RM144.7mil in revenue.
It reported profit before tax of RM84mil and revenue of RM534.9mil for the 11-month period ended December 31, 2015, a full year’s comparison which was not available due to the change of financial year end from January 31 to December 31.
TA Global’s development projects contributed 8% to the group – TA Enterprise’s - total revenue.
“Going forward, we expect to see a higher contribution from project development and we hope to see higher contribution from project development in moving towards the more balanced contribution of 50:50 from the development projects as we start to roll out the RM3.1bil projects,” Joo Kim says.
At this point, TA Global has yet to announce any plans to sell any of its overseas assets.
“Our long term vision is to be a global real estate conglomerate that is ranked in the top 100 real estate companies in the world, from a market cap and annual turnover standpoint. This is a big audacious goal that is going to take some time for us to get there, but we will start by setting smaller targets along the way,” Joo Kim says.
The group plans on investing more with the countries it is familiar with as it scours Canada and Australia for more opportunities.
“We like being diversified as it acts as a natural hedge against currency fluctuations as well as market cycles,” Joo Kim says.