Thailand’s Singha Estate plans mega M&A push; to launch two REITs in 2016

Visual of The ESSE Asoke, one of Singha Estate's condominium projects, from the company's website

Thailand-based Singha Group’s real-estate arm Singha Estate PCL has announced an aggressive acquisition strategy as it draws up plans to buy 65 hotels in domestic and overseas markets by 2020.

The company has set aside an investment budget of over 100 billion baht ($2.83 billion) over the next four-year period to be spent on joint ventures and acquisitions.

As part of its acquisition strategy, it intends to manage 15 hotels and operate the remaining 50 hotels under joint venture firms.

“We still focus on acquiring high potential assets aggressively, particularly hotels, which generate the return on investment faster than other properties. We will invest in the assets with the internal rate of return of at least 20 per cent,” , Naris Cheyklin, CEO of Singha Estate, told local media.

The group hopes its M&A strategy will help it reach a capacity of 5,000 rooms and hit revenues of 20 billion baht by 2019. However, it has revised the revenue target in 2015 from 4 billion baht to 3 billion baht following the slump in property demand and the economic slowdown.

The group is currently discussing four to five property deals, ranging from hotels to office space, in Thailand. It is likely to close a deal this year.

The firm also plans to form two real estate investment trusts in 2016, the CEO added.

In early October, it signed a contract with FICO Holding (UK), a subsidiary of diversified Fico Corporation, to form a joint venture company to acquire 26 hotels under the Mercure brand in the UK for 8.5 billion baht ($243 million). This is its first step to make an acquisition and tap into hotel business in the UK.

Naris cited that it would book the profit of around 400-500 million baht per year from the UK-based hotels.

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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.