Thailand’s REIT deluge: 5 IPOs in next 6 months

After a rough year of political instability, Thailand seems to be back to normal. The signs of recovery are especially visible in the country’s real estate sector, where the sales are on an upswing and several new projects are in offing.

In fact, several Thailand-based real estate players are planning use this recovery and the returning investor confidence, to raise funds through setting up of real estate investment trusts (REITs).

At least five such REIT launches have already been planned for the next few months. Back of the envelop calculation estimates that a collective amount of more than $500 millon dollars worth of assets will be transferred to these REITs.

While the focus is on the domestic markets, Thai realty companies are also increasing their investment outlays for the region. Burgeoning investor confidence has led them to plans aggressive expansion into other ASEAN countries, especially Vietnam and Indonesia. Again, this is expected to be funded by these REITs.

Of the five REITs, that are expected to hit the market within the next few months,L&H Group has already launched a retail based REIT. WHA group is expected to do so in the first week of next month. While the Ticon Industrial Connection and the AMATA Corporation are still waiting for formal approval, the ERAWAN Group has its REIT slotted for launch in the first half of 2015.

The funds raised from all the REIT IPOs, will be used mainly to diversify into related sectors or for expansion in both domestic markets and abroad.  Below are the details of five upcoming REITS from Thailand’s realty sector.

 

Ticon Industrial Growth Leasehold Property Fund

Ticon Industrial Connection Plc (TICON) has postponed offering the REIT from this month to next month as it’s awaiting for the Securities and Exchange Commission to approve the filing. It plans to mobilise around $131 million (4.3 billion baht) through the REIT, of which 70% will be the freehold selling and the rest 30% will be the 30-year-old lease hold.

It plans to book a gain from the free-hold asset sales this year, while book a gain from the lease-hold assets over the next 30 years. “In the following years, we also plan to sell more of our assets to the REIT. For 2015, we expect to sell our asset worth around 4 billion-5 billion baht to invest in many projects,” said TICON’s managing director Virapan Pulges.

The company is planning to expand its business overseas. Starting from Indonesia, where they plan to build warehouses and factories for rent. For this, the company might decide to join hands with Mitsui and Co (Asia Pacific) Pte. Ltd, which earlier acquired 30% of shares in Ticon Management Company.

Apart from the Indonesian expansion, the company plans to allocate around $200 million (6.5 billion baht) for investment, next year. Depending on the government’s energy policy, the company is also hoping to expand its solar roof capacity, currently at one megawatts.

 

AMATA Corporation

Waiting for the SEC’s approval, AMATA, an industrial real estate developer, will be launching an REIT in the first quarter of 2015; a plan that had to be postponed from mid-2014 launch date, due to the prolonged political turmoil in the first half of the year.

The trust’s real estate assets is about 160,000 square meters, currently valued at $137 million (4.5 billion baht).

In 2015, the company plans to spend about $91.5 million -$122 million (3-4 billion baht), doubled from $46 million (1.5 billion baht) this year, for developing industrial land in Thailand, Myanmar and Vietnam, said Steven Siew, senior vice president (finance and investor relations).

Of that budget, about $46 million (1.5 billion baht) will used to develop the land in Thailand, while the rest will be used to expand industrial estate in Vietnam and develop infrastructure in Myanmar.

Another important move next year is to list AMATA VN Plc, the company subsidiary responsible for the business in Vietnam, in the Stock Exchange of Thailand. After this IPO, AMATA  plans to develop Long Thanh Industrial Estate in  Dong Nai province in the last quarter of 2015.

 

Land and Houses Plc

L&H Group, Thailand’s real estate and shopping center developer, has announced the launch the country’s first shopping mall REIT last week. It will transfer real estate assets valued at $191 million (6.27 billion baht) into a Trust and offer it to the public, within this year. The assets include Terminal 21 and other assets (excluding the hotel).

This trust will run the shopping mall and other assets 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).

Vorada Thangsurbkul, head of the investment banking Division 2, Siam Commercial Bank, believes that this fund would be a flagship for other shopping center owners and property developers to set up more property funds in retail business. Investment banking Division 2, Siam Commercial Bank is a financial advisor for this REIT.

 

WHA Corp Plc

Although its revenue this year will fall to $168 million (5.5 billion baht) from the $213 million (seven billion baht) in 2013, WHA is expecting a surge in revenue in 2015, after selling assets to its new REIT.

The company plans to use the funds from the REIT for investment in other business such as logistics and renewable projects. This would help it diversify business risk in the other Asean countries.

WHA Premium Growth Real Estate Investment Trust (WHART) will launch the IPO between Dec 1-4 and start trading on the SET on Dec 18. The trust is worth between $137 million (4.5 billion) to $152.5 million (five billion baht) and is expected to increase WHART’s asset size to $1.5 billion (50 billion baht) in the next five years.

WHART’s assets include three WHA’s warehouses located at the Bang Na-Trat Road and Lat Krabang district. The company plans to add the assets worth at least $152.5million (five billion baht) into the trust, every year.

 

ERAWAN Hotel Growth Fund

After successfully launching an REIT last year, ERAWAN Group plans to turn its hotel assets, worth around $55 million- $61 million (1.8 billion- 2 billion baht) to form another free-hold REIT, in the second quarter or the third quarter of the next year.

The raised fund will be used to develop other property projects in the future. Next year, the company has set an investment budget of $58 million (1.9 billion baht), of which $40 million (1.3 billion baht) will be used to build a hotel and the rest will go toward renovating the current hotels.

Moreover, it has plan to develop 100 units of HOP INN, its budget brand of hotels, by 2020. For 2016, the company plans to focus on investment options in Indonesia and the Philippines. The company is is also researching investment opportunities in the rest of Southeast Asia.

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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.

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.