Holiday Inn Phi Phi eyes freehold fund
The Holiday Inn Resort Phi Phi Island, a four-star accommodation in Krabi, plans to launch a freehold property fund this month managed by One Asset Management.
One Asset chief executive Win Udomrachtavanich said the resort, valued at 1.72 billion baht, belonged to Chamroen Chittaratsaenee, who had been developing hotels and resorts for over 20 years.
The initial public offering distribution will take place from Nov 17-27 and is almost fully booked.
Mr Win said the resort would be an underlying asset of the Thailand Holiday Inn Resort Phi Phi Island Property Fund (TLHTF).
The resort sits on 31 rai of beachfront on Koh Phi Phi and has 128 units. Its occupancy rate is 70-80%, rising to 90% during the high season.
The return of the new property fund is projected to average 7.2% to 8% over the next 15 years.
Mr Chamroen will put up a cash reserve of 70 million baht as a lease security throughout the 15 years of the lease term, with a bank guarantee for each year's rent payment during the first six years.
The property owner also committed to reinvesting in the fund to maintain shareholding at no less than 25% for the first six years.
"The asset owner will also guarantee the return for the first 18 months apart from the cash reserve in a bid to assure investors that the business will actively perform," Mr Win said.
The fund's annual income is anticipated at 136 million baht for the first three years, rising every three years to 142 million, 148 million, 154 million and 160 million over the life of the 15-year lease. Once the 15-year deal ends, options will include selling assets or rebuilding.
Mr Win said the owner was committed to revenue growth of 4% every three years.
"Thanks to Mr Chamroen's experience in the hotel industry, the investment was done with a good plan for location, activities and sizes," he said. "Also, assets are managed by a professional hotel chain for a strong performance even in the low season."