Phi Phi Holiday misses rental payment

Phi Phi Holiday misses rental payment

An overhead photo of Phi Phi Holiday Inn Resort.
An overhead photo of Phi Phi Holiday Inn Resort.

Phi Phi Holiday Co Ltd has defaulted on rental payment to Phi Phi Holiday Inn Resort, affecting the income of Thailand Hospitality Property Fund (TLHPF), which is managed by One Asset Management.

One Asset declared on Dec 4 Phi Phi Holiday Co Ltd, the lessee of Phi Phi Holiday Resort Hotel project, sent it a letter to notify One Asset of the scheduled sale of Phi Phi Holiday's land located on Loh Lana Bay, Phi Phi Don Island in November. The sale has not been completed.

As of Dec 4, which was the due date for the November rental payment, rent had not been paid to the fund, putting Phi Phi Holiday in default for its rental payments. The fund plans to exercise its rights against Phi Phi Holiday to pay the rent, pursuant to legal procedures.

The unit price of TLHPF tumbled by 2.16% to 6.80 baht on Wednesday following One Asset's notification to the Stock Exchange of Thailand regarding the failure to pay rent on time.

The initial public offering distribution took place on Nov 27, 2015, valued at 1.72 billion baht.

TLHPF initially invested in land and buildings for hotels of Phi Phi Holiday Inn Resort Project as a freehold property fund, aiming to construct a four-star accommodation located on 31 rai of beachfront on Phi Phi Island.

After initial investment by the mutual fund, Phi Phi Holiday Co Ltd was the project lessee.

The lease term was three years, with a condition that the mutual fund could extend the lease period four three-year terms. As a result, the longest period for the lease term could be 15 years.

Phi Phi Holiday Co Ltd hired Holiday Inn (Thailand) Ltd to manage the project, in accordance with the management agreement.

According to the prospectus, the fund's annual income is derived solely from fixed rentals under the lease agreement between the mutual fund and the tenant, with annual dividend payment of at least 90% of adjusted net profits. Holiday Inn (Thailand) Ltd plans to pay dividends two times per year, with payment of 95% of profits.

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