Rebuilt Golden Land starting to shine
Golden Land Plc (GOLD) is a leading residential and commercial real estate developer. President Thanapol Sirithanachai discusses the company's strategy and outlook.
GOLD has undergone a successful turnaround over the past few years. How this was achieved?
In the first year of the turnaround, 2013, we rebuilt the foundation of the company, refocusing only on residential and commercial projects and improving our workforce, management teams and project management. We also expanded our team from 80 to 480 people today.
In 2014 we were able to unlock the value that existed within GOLD. We acquired additional assets and the developer Krungthep Land (KLAND), all of which combined to increase our revenues from 1.6 billion baht to 4.4 billion with a profit of 350 million, while our asset base grew from 12 billion to 21 billion baht.
In 2015 we continued building on our new base and now have low-rise products in townhomes and single detached houses across virtually every segment, as well as three office buildings in Bangkok. As a result we were able to pay our first dividend in seven years to our shareholders and plan to continue doing so as our performance improves.
Your shareholder base is interesting with Frasers Property recently acquiring a stake. How does Frasers add value to GOLD?
We issued an additional 685 million shares to Frasers Property Holdings (Thailand), the local unit of Frasers Centrepoint, at 7.25 baht per share for a total of 4.97 billion baht, and it now holds 29.5% in GOLD. Frasers is a fully fledged real estate group with assets in 70 cities around the world and a proven track record in large-scale, mixed-use developments.
Frasers also has REIT platforms in retail, commercial and hospitality. Thus we hope to benefit from its decades of knowledge so that we can take GOLD to the next stage.
GOLD, together with Univentures Plc, launched the GVREIT this month. What are your plans for the REIT and the funds raised?
The Golden Ventures REIT (GVREIT) establishes synergy between Sathorn Square Office Tower and Park Ventures with a value of 10 billion baht. GOLD holds a 25.1% stake in the fund and will be the property manager. This REIT helps us to monetise our commercial assets, providing us with capital to continue expanding. Financially we will receive close to 4 billion baht, with 2 billion used to repay loans and the rest to expand residential projects and invest in the Sam Yan project, which will cost 8.5 billion baht over four years.
What is the Sam Yan project?
This will be a joint venture between GOLD with a 49% shareholding and TCC Asset with the remaining 51%. The aim is to develop a mixed-use complex with residences, office and retail space. It is located at the junction of Rama IV and Phaya Thai roads directly opposite Chamchuri Square and adjacent to Chulalongkorn University. The land plot is 13 rai with a gross floor area of 222,000 square metres. We expect to confirm more details this year.
How has Thailand's economic slowdown affected your business?
For the residential business, we still expect this to be another year of organic growth as the industry has been supported by government incentives. We still see customers queueing on weekends and launch days to visit our projects because of their locations and the quality we are able to offer.
Without a doubt the weakness in the Thai economy has led to a decrease in homebuyers' ability to secure mortgages, but because of marketing efforts we have been able to mitigate this. For our commercial business, Sathorn Square is essentially fully leased out and our new office building, FYI Center, is 70% preleased; thus we are very confident that this segment will continue to be positive for us.
What are your views on the real estate industry in Thailand?
We consider ourselves to be incredibly fortunate to be in real estate because we are providing customers with something they can actually experience, that physically exists. It is bricks and mortar and the basics have not changed for decades, which is dramatically different when compared to the consumer electronics, manufacturing and media industries.
There have of course been shifts in consumer tastes, with more shifts to condominiums. Our marketing formats have shifted more to online versus offline. The functions of our homes are also modified in line with today's lifestyles, but the core basics -- location, price, bedrooms and bathrooms -- remain the same.
Where do you see GOLD five years from now?
Our aim is to be a top five property developer in Thailand in revenue terms. With our supportive shareholder base, a strong mix between rental and development projects and our focus on delivering a quality product to our customers, we feel confident in our ability to achieve this and create value for our shareholders.
The Executive Q&A Series is presented by ShareInvestor, Asia's leading financial internet media and technology company and the largest investor relations network in the region. The interview was conducted by Pon Van Compernolle. For more information, e-mail email@example.com or firstname.lastname@example.org. Website: www.ShareInvestorThailand.com