mr funny
21-06-10, 17:13
http://www.businesstimes.com.sg/sub/companies/story/0,4574,391269,00.html?
Published June 21, 2010
Roxy-Pacific expects another strong year
The property and hospitality group eyes joint ventures to grow its business
By SUKI LOR
TEO HONG LIM and his three brothers have most of the bases covered when it comes to managing Roxy- Pacific Holdings, the property and hospitality group built up by their father. Between them, they have expertise in hospitality, accountancy, architecture and business administration.
Mr Teo became executive chairman and chief executive of the mid-sized property developer in 1993. Armed with an honours degree in accountancy from the National University of Singapore, he spent about three years at DBS Bank as assistant treasurer before joining Roxy-Pacific.
He chose not to enter the family business straight after graduation as he figured that a stint working for another company would allow him to empathise with his own employees later on, he told Pulses magazine in an interview at the Grand Mercure Roxy Hotel on East Coast Road which the group owns. 'As bosses and managers, we need to understand how staff feel. Sometimes, staff have their limitations,' he said.
Mr Teo is the youngest of four children - all boys. They work together in the family company, offering their complementary strengths. 'My family guided us into various areas of specialisation,' said Mr Teo, adding that personal inclination also played a part. 'My interest is in numbers,' he said.
Mr Teo's brothers are all executive directors at Roxy-Pacific. Eldest brother Chris Teo Hong Yeow, who heads the group's hospitality division, has a degree in a related field from Michigan State University. He then garnered management experience working in hotels such as the Amanpuri in Phuket and the Amandari in Bali.
'My second brother is a business administration graduate so he's handling HR (human resources) and general admin. My third brother is an architect by training. Myself, I am an accountant. We cover quite a lot of requirements for the business,' Mr Teo said.
His father, Teo Kok Leong, is undoubtedly his top role model in business. Having built the business from scratch, he could take on many roles in the company, noted Mr Teo. 'He is very much a hands-on person.' And he taught his children to be equally adept at handling multiple roles.
Mr Teo described his father as 'a serious no-nonsense guy', whose business principles centred on trust and integrity. These values continue to be important to the second-generation leaders at Roxy-Pacific.
For instance, they are very aware of the fact that cash flow is important to their suppliers and contractors. 'We ensure our payments are prompt, that we do a fair business,' said Mr Teo. This is in line with his father's exhortation to pay in full for a job that has been completed, and not one cent less.
As Mr Teo tells it, his father, who hailed from Taiwan's Kinmen island, was very poor when he arrived in Singapore as a young man. Lacking formal education, he worked as a rickshaw driver and a lorry driver before venturing into property development and construction in the early 1960s. He set up the company in 1967 as a joint venture with other shareholders. In the late 1980s, he acquired majority control.
Earlier projects that the father developed include Maxwell House, an office block in Tanjong Pagar, built in the early 1970s.
Roxy-Pacific has come a long way since, turning in record earnings and revenue last year. Besides the Grand Mercure Roxy Hotel, it also owns 51 retail units at the adjacent Roxy Square Shopping Centre, which the company developed in two phases. The first phase, comprising four floors of shops and two floors of residential units, was completed in 1984.
Having developed phase one of Roxy, his father was stalled by the recession in the mid-1980s, said Mr Teo. The delay turned out to be fortuitous as the plot ratio for the land was raised in the early 1990s.
With the revision, the hotel that was completed in 2000 had 483 rooms, much more than in the original plan. Subsequent upgrading increased the number of rooms to 558. The mall was completed in 1998.
It is no accident that the hotel and mall are located in the east since the family has lived in that part of Singapore for many years. Although they moved several times when Mr Teo was growing up, they stayed mostly in the east.
'When I was born, we were in Telok Kurau,' he said. After that, the family relocated to Mountbatten, then Geylang before returning to Telok Kurau.
Now, apart from Mr Teo's second brother who lives in Bishan, the rest of the family still resides in the east. Home for Mr Teo now is a bungalow at Upper East Coast which he shares with his homemaker wife, two sons and two daughters. And no, he didn't develop his own house. Having spent years building homes for others, 'I got sick of building,' he quipped. 'I like to buy ready-built. I'm a practical person,' he added.
Mr Teo, 44, subscribes to a lifestyle that is as down-to-earth as his business strategy. Describing himself as a 'simple person', he reads to de-stress. He is not much into sports, nor is he a foodie, as he has to watch his cholesterol. 'Every day, I just read. Even in my car, I have a book,' he said.
As an entrepreneur, he gets inspiration from reading books on business strategy and about other companies. But for the sheer pleasure of reading, he is drawn to Chinese novels.
While English was his first language in school, 'strangely enough, since secondary school, I couldn't get myself to read English novels any more', he said. 'So I've been reading Chinese books, but with lighter themes', such as science fiction. He has an electronic book reader with a few hundred titles downloaded.
An adherent of the 'early to bed, early to rise' maxim, he is up shortly after 5am daily, and starts the day by reading the news.
Mr Teo said that the Asian crisis in the late 1990s was the main challenge that he faced as CEO. Roxy-Pacific was in the midst of building the second phase of the shopping mall when the crisis hit. One of the group's main assets, the hotel site, was not generating any income, a less than ideal situation when interest rates had shot up, pushing financing costs higher. 'You can have a low gearing and be asset-rich, but if your assets are not liquid, you have a major challenge.'
To improve its liquidity, Roxy-Pacific sold many of the shop units at the mall. And with the income from selling those units, 'we managed to ride out the crisis, improve liquidity and complete the hotel in 2000', he said.
'Liquidity is king. Properties are illiquid, they are not like shares. When the liquidity crisis hit, even big banks can collapse within a week, let alone small companies.'
Imbued with a sense of pragmatism and prudence spurred by lessons learnt from the Asian crisis, Mr Teo felt that Roxy-Pacific had to diversify its income base after the hotel was completed. So it returned to building homes, the first project being the redevelopment of the bungalow in Telok Kurau which had been the Teos' family home for more than 20 years.
The house, which sat on more than 20,000 square feet of land, was sold to Roxy-Pacific and redeveloped into a 24-unit apartment block.
Even though its projects fared well in 2007, Roxy-Pacific decided to go for a listing in March 2008 to bolster its position.
'There's nothing for certain in such a fast-moving market. The IPO funds were a buffer for liquidity and for risk management,' Mr Teo explained. With its finances boosted, Roxy-Pacific was 'quite relaxed and comfortable' during the latest global financial crisis. 'We didn't lose sleep.'
Indeed, the company fared well last year, with net profit rising 13 per cent to $27.9 million and sales up 26 per cent to $163.5 million. Property development accounted for 76 per cent of revenue, the hotel business 23 per cent and property investment the remaining one per cent.
Roxy-Pacific is looking forward to another strong performance this year. Mr Teo said that the company had an order book of $280 million at end-2009 from residential units that were sold.
These units will be completed between 2010 and 2011, and could generate revenue of $140 million in each of the two years. And that does not take into account its hotel revenue.
The company is 'very intense' about buying land, and is constantly on the lookout for suitable sites.
Mr Teo said that he is prepared to consider any proposal, whether it comes from a big-name consultant or a small-time agent. 'We have to evaluate every opportunity.'
He said that the group usually launches projects six to seven months after securing the sites and does not try to time the market.
A case in point: A week after US investment house Lehman Brothers collapsed in September 2008, Roxy-Pacific went ahead to launch a project. 'As long as there is a margin, we will sell.'
Along with the Marina House site acquired in early April, Roxy-Pacific has seven projects in the pipeline. Mr Teo targets launching three or four of them for sale by the second half. This 'could create another chunk of revenue or order books to be recognised for the next three or four years', he said.
Roxy-Pacific has a 20 per cent stake in a consortium which bought Marina House in Shenton Way for $148 million. The office tower will be redeveloped into a 42-storey residential apartment block with commercial space on the first level.
During the interview, Mr Teo also touched on Roxy-Pacific's expansion plans. It is open to developing a second or even a third hotel. It had bid for a hotel site in New Bridge Road offered in a government tender last year but did not win it. The group is likely to make another bid, with location being a prime consideration, Mr Teo said.
That's not all. 'I also look at a lot of office buildings. If there is a cheap office building today, I don't mind buying.'
As for property development, Mr Teo said that forming joint ventures to tackle bigger projects will help it secure land, the supply of which is becoming more limited in Singapore.
Among the new projects Roxy-Pacific will launch this year is a joint venture with an unlisted developer. More joint ventures could be in the offing 'because we cannot profess to have the best network or that we can be everywhere', said Mr Teo, adding: 'Sometimes, a JV also enables us to broaden our land supply.'
Having said that, Roxy-Pacific has no intention to venture overseas. It is still able to find development sites at home, while it would take time to become familiar with a new market, Mr Teo reasoned.
'Take Telok Kurau, for example. We know every corner. We know where there is a temple, where there's a park. If somebody gives us an address, we know what price we can sell and the construction cost. If somebody gives us an address in Shanghai (for example), we don't have that feel. It took us years to build that feel in Singapore.'
This article first appeared in the June edition of Pulses, a publication produced by The Business Times
Published June 21, 2010
Roxy-Pacific expects another strong year
The property and hospitality group eyes joint ventures to grow its business
By SUKI LOR
TEO HONG LIM and his three brothers have most of the bases covered when it comes to managing Roxy- Pacific Holdings, the property and hospitality group built up by their father. Between them, they have expertise in hospitality, accountancy, architecture and business administration.
Mr Teo became executive chairman and chief executive of the mid-sized property developer in 1993. Armed with an honours degree in accountancy from the National University of Singapore, he spent about three years at DBS Bank as assistant treasurer before joining Roxy-Pacific.
He chose not to enter the family business straight after graduation as he figured that a stint working for another company would allow him to empathise with his own employees later on, he told Pulses magazine in an interview at the Grand Mercure Roxy Hotel on East Coast Road which the group owns. 'As bosses and managers, we need to understand how staff feel. Sometimes, staff have their limitations,' he said.
Mr Teo is the youngest of four children - all boys. They work together in the family company, offering their complementary strengths. 'My family guided us into various areas of specialisation,' said Mr Teo, adding that personal inclination also played a part. 'My interest is in numbers,' he said.
Mr Teo's brothers are all executive directors at Roxy-Pacific. Eldest brother Chris Teo Hong Yeow, who heads the group's hospitality division, has a degree in a related field from Michigan State University. He then garnered management experience working in hotels such as the Amanpuri in Phuket and the Amandari in Bali.
'My second brother is a business administration graduate so he's handling HR (human resources) and general admin. My third brother is an architect by training. Myself, I am an accountant. We cover quite a lot of requirements for the business,' Mr Teo said.
His father, Teo Kok Leong, is undoubtedly his top role model in business. Having built the business from scratch, he could take on many roles in the company, noted Mr Teo. 'He is very much a hands-on person.' And he taught his children to be equally adept at handling multiple roles.
Mr Teo described his father as 'a serious no-nonsense guy', whose business principles centred on trust and integrity. These values continue to be important to the second-generation leaders at Roxy-Pacific.
For instance, they are very aware of the fact that cash flow is important to their suppliers and contractors. 'We ensure our payments are prompt, that we do a fair business,' said Mr Teo. This is in line with his father's exhortation to pay in full for a job that has been completed, and not one cent less.
As Mr Teo tells it, his father, who hailed from Taiwan's Kinmen island, was very poor when he arrived in Singapore as a young man. Lacking formal education, he worked as a rickshaw driver and a lorry driver before venturing into property development and construction in the early 1960s. He set up the company in 1967 as a joint venture with other shareholders. In the late 1980s, he acquired majority control.
Earlier projects that the father developed include Maxwell House, an office block in Tanjong Pagar, built in the early 1970s.
Roxy-Pacific has come a long way since, turning in record earnings and revenue last year. Besides the Grand Mercure Roxy Hotel, it also owns 51 retail units at the adjacent Roxy Square Shopping Centre, which the company developed in two phases. The first phase, comprising four floors of shops and two floors of residential units, was completed in 1984.
Having developed phase one of Roxy, his father was stalled by the recession in the mid-1980s, said Mr Teo. The delay turned out to be fortuitous as the plot ratio for the land was raised in the early 1990s.
With the revision, the hotel that was completed in 2000 had 483 rooms, much more than in the original plan. Subsequent upgrading increased the number of rooms to 558. The mall was completed in 1998.
It is no accident that the hotel and mall are located in the east since the family has lived in that part of Singapore for many years. Although they moved several times when Mr Teo was growing up, they stayed mostly in the east.
'When I was born, we were in Telok Kurau,' he said. After that, the family relocated to Mountbatten, then Geylang before returning to Telok Kurau.
Now, apart from Mr Teo's second brother who lives in Bishan, the rest of the family still resides in the east. Home for Mr Teo now is a bungalow at Upper East Coast which he shares with his homemaker wife, two sons and two daughters. And no, he didn't develop his own house. Having spent years building homes for others, 'I got sick of building,' he quipped. 'I like to buy ready-built. I'm a practical person,' he added.
Mr Teo, 44, subscribes to a lifestyle that is as down-to-earth as his business strategy. Describing himself as a 'simple person', he reads to de-stress. He is not much into sports, nor is he a foodie, as he has to watch his cholesterol. 'Every day, I just read. Even in my car, I have a book,' he said.
As an entrepreneur, he gets inspiration from reading books on business strategy and about other companies. But for the sheer pleasure of reading, he is drawn to Chinese novels.
While English was his first language in school, 'strangely enough, since secondary school, I couldn't get myself to read English novels any more', he said. 'So I've been reading Chinese books, but with lighter themes', such as science fiction. He has an electronic book reader with a few hundred titles downloaded.
An adherent of the 'early to bed, early to rise' maxim, he is up shortly after 5am daily, and starts the day by reading the news.
Mr Teo said that the Asian crisis in the late 1990s was the main challenge that he faced as CEO. Roxy-Pacific was in the midst of building the second phase of the shopping mall when the crisis hit. One of the group's main assets, the hotel site, was not generating any income, a less than ideal situation when interest rates had shot up, pushing financing costs higher. 'You can have a low gearing and be asset-rich, but if your assets are not liquid, you have a major challenge.'
To improve its liquidity, Roxy-Pacific sold many of the shop units at the mall. And with the income from selling those units, 'we managed to ride out the crisis, improve liquidity and complete the hotel in 2000', he said.
'Liquidity is king. Properties are illiquid, they are not like shares. When the liquidity crisis hit, even big banks can collapse within a week, let alone small companies.'
Imbued with a sense of pragmatism and prudence spurred by lessons learnt from the Asian crisis, Mr Teo felt that Roxy-Pacific had to diversify its income base after the hotel was completed. So it returned to building homes, the first project being the redevelopment of the bungalow in Telok Kurau which had been the Teos' family home for more than 20 years.
The house, which sat on more than 20,000 square feet of land, was sold to Roxy-Pacific and redeveloped into a 24-unit apartment block.
Even though its projects fared well in 2007, Roxy-Pacific decided to go for a listing in March 2008 to bolster its position.
'There's nothing for certain in such a fast-moving market. The IPO funds were a buffer for liquidity and for risk management,' Mr Teo explained. With its finances boosted, Roxy-Pacific was 'quite relaxed and comfortable' during the latest global financial crisis. 'We didn't lose sleep.'
Indeed, the company fared well last year, with net profit rising 13 per cent to $27.9 million and sales up 26 per cent to $163.5 million. Property development accounted for 76 per cent of revenue, the hotel business 23 per cent and property investment the remaining one per cent.
Roxy-Pacific is looking forward to another strong performance this year. Mr Teo said that the company had an order book of $280 million at end-2009 from residential units that were sold.
These units will be completed between 2010 and 2011, and could generate revenue of $140 million in each of the two years. And that does not take into account its hotel revenue.
The company is 'very intense' about buying land, and is constantly on the lookout for suitable sites.
Mr Teo said that he is prepared to consider any proposal, whether it comes from a big-name consultant or a small-time agent. 'We have to evaluate every opportunity.'
He said that the group usually launches projects six to seven months after securing the sites and does not try to time the market.
A case in point: A week after US investment house Lehman Brothers collapsed in September 2008, Roxy-Pacific went ahead to launch a project. 'As long as there is a margin, we will sell.'
Along with the Marina House site acquired in early April, Roxy-Pacific has seven projects in the pipeline. Mr Teo targets launching three or four of them for sale by the second half. This 'could create another chunk of revenue or order books to be recognised for the next three or four years', he said.
Roxy-Pacific has a 20 per cent stake in a consortium which bought Marina House in Shenton Way for $148 million. The office tower will be redeveloped into a 42-storey residential apartment block with commercial space on the first level.
During the interview, Mr Teo also touched on Roxy-Pacific's expansion plans. It is open to developing a second or even a third hotel. It had bid for a hotel site in New Bridge Road offered in a government tender last year but did not win it. The group is likely to make another bid, with location being a prime consideration, Mr Teo said.
That's not all. 'I also look at a lot of office buildings. If there is a cheap office building today, I don't mind buying.'
As for property development, Mr Teo said that forming joint ventures to tackle bigger projects will help it secure land, the supply of which is becoming more limited in Singapore.
Among the new projects Roxy-Pacific will launch this year is a joint venture with an unlisted developer. More joint ventures could be in the offing 'because we cannot profess to have the best network or that we can be everywhere', said Mr Teo, adding: 'Sometimes, a JV also enables us to broaden our land supply.'
Having said that, Roxy-Pacific has no intention to venture overseas. It is still able to find development sites at home, while it would take time to become familiar with a new market, Mr Teo reasoned.
'Take Telok Kurau, for example. We know every corner. We know where there is a temple, where there's a park. If somebody gives us an address, we know what price we can sell and the construction cost. If somebody gives us an address in Shanghai (for example), we don't have that feel. It took us years to build that feel in Singapore.'
This article first appeared in the June edition of Pulses, a publication produced by The Business Times