Thailand’s Land & Houses plans $190m REIT IPO

Thailand’s leading property developer Land and Houses Group (L&H) will transfer Bangkok’s Terminal 21 shopping center and other assets to form a 6.3 billion baht ($189 million) real estate investment trust (REIT), and will offer a majority stake in it to the public, its managing director said.

Currently, a L&H unit – L&H Property – holds 60% shares of Termainal 21 and the group of Singaporean investors hold the remaining 40%.

After the REIT is launched, L&H and Singaporean investors will hold around 15%-20% in the REIT,  L&H Property’s Managing Director Adisorn Thananan-narapool told reporters.

The remaining 80-85% will be offered to the public through an Initial Public Offering (IPO), and the proceeds used to finance the group’s rental and apartment businesses.

The trust will run Terminal 21, including the shopping mall and the parking lots, for 26 years. Of total 6.227 billion baht, it will get 5.027 billion baht ($153 million) from the fund and will raise finance for the balance amount of 1.2 billion baht ($36 million).

The company had initially planned to issue the REIT last year but was forced to postpone due to the political chaos in Bangkok.

The asset sales to the REIT, which will reflect in its fourth quarter earnings, is set to help the company exceed its profits target of 32 billion baht ($974 million) for this fiscal, Thananan-narapool said, while adding that it planned to launch a subsequent 10 billion bhat REIT next year.

He also said the company could raise a similar amount through a bond issue and spend the proceeds on land acquisitions during the next fiscal.

Thananan-narapool said that Terminal 21 was located in one of the prime locations in Bangkok, a very important factor that would contribute to the success of its retail property business.

“We are the only shopping mall that is located in the center and connected to both BTS skytrain and MRT subway. Instead of setting up a luxury mall on this golden location, we prefer targeting the middle-class and working people, which makes our traffic as high as 100,000 people a day,” he said.

Thananan-narapool  said that this REIT would be a role model for other property projects under L&H group. “We will use the funds from this REIT to invest in retail property and apartments, for rent. We would like to build more shopping malls but it is really up to the location. If we get the prime location like Terminal 21, we will probably launch another REIT in the future.”

Vorada Thangsurbkul, head of the investment banking division 2 of Siam Commercial Bank, a financial advisor of this REIT, said trusts in retail businesses were normally more attractive than other REITS as they grew continuously, in line with the overall economy.

Terminal 21 has been operating for three years with an annual growth rate (of rental fee) of 6.6%. Around 98% of total rental space is occupied, mainly by restaurants, fashion-related stores, cinema and the supermarket.

 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.