Following the planned takeover of Thai Property Plc (TProp) to become the country's fourth-largest property developer by assets and revenue, the SET-listed Property Perfect Plc (PF) is expected to conclude another five partnership deals including either buying or selling a stake in its affiliate Krungthep Land (KLand) with liquor tycoon Charoen Sirivadhanabhakdi.
Property Perfect chief executive Chainid Adhyanasakul (left) and deputy chief supporting officer Sirirat Wongwattana share the firm's future plans after it bought Thai Property Plc, revealing it is in talks concerning five potential partnerships.
Property Perfect is open to options for either selling or acquiring a stake in its joint venture property developer, in which the company owns a 20.22% stake, while Fraser (Thailand) Pte, controlled by Mr Charoen, holds 40.45%, Property Perfect chief executive Chainid Adhyanasakul said.
Should Property Perfect sell its stake in KLand to Fraser, it will raise about 1 billion baht from the deal, he said, adding the company can cash in on the upside gain after KLand seeks a listing on the stock market if Property Perfect decides to acquire an additional stake from Fraser, he said.
The negotiation is expected to reach a conclusion by next quarter, before KLand will go public.
"We know KLand very well, as we've held its stake for a long time, while Fraser just became a shareholder two years ago," he said, noting he also had a good relationship with other shareholders of KLand.
Over the past two years, Mr Chainid has been in several talks with Mr Charoen to acquire an additional stake in KLand, but the tycoon also had the same intention.
"If we buy it, we'll make the transaction through a share swap, like the takeover of TProp," he said.
Property Perfect said in a filing with the Stock Exchange of Thailand (SET) late on Monday it would buy all the shares of TProp through a share swap at a ratio of one TProp share for every half share of Property Perfect, equal to an offering price of 57 satang apiece.
The tender offer for TProp's shares is subject to approvals from the Securities and Exchange Commission and both companies' shareholders, with a condition that 75% of the acquired company must sell its shareholding through the tender offer. Property Perfect's shareholders will consider the issue at the meeting on July 29.
Following completion of TProp's tender offer, Property Perfect is required to comply with the chain principle to launch a tender offer for the entire shares of Grande Asset Hotels and Property Plc (GRAND), as it will have significant control in the company. TProp now owns more than a 40% stake in Grande Asset.
Under the plan, Property Perfect will swap its 1.149123 shares for a share of Grande Asset.
After the acquisitions, Property Perfect's total assets will increase to 45.22 billion baht from 30.66 billion, while revenue is estimated to be raised to 22.17 billion from 15.99 billion. Property Perfect now ranks as the country's eighth-largest property developer by assets and ninth by revenue.
Shareholder equity will almost double to 16.39 billion baht from 8.64 billion. The interest-bearing debt-to-equity (D/E) ratio will decrease to 1.33 times.
TProp has two office buildings for rent: One Pacific Place Building and Two Pacific Place Building, both on Sukhumvit Road. Both are managed by Pacific Estate Development Limited, a subsidiary of TProp. Grande Asset owns three luxury hotels: the Westin Grande Sukhumvit, Sheraton Hua Hin Resort and Spa, and Sheraton Hua Hin Pranburi Villas, as well as the condominium Hyde Sukhumvit.
Grande Asset also plans to develop the Hyatt Regency Bangkok with 273 rooms on Sukhumvit Soi 11.
"Grande Asset will see a big turnaround this year as it will realise revenue from the Hyde Sukhumvit condo project. This will boost Property Perfect's revenue," said Mr Chainid.
Hyde is worth 5 billion baht and is 90% sold. The company plans to develop Hyde 2 with 450 units worth 3 billion baht on Sukhumvit Soi 11 next year.
Property Perfect plans to launch a real estate investment trust, in which two hotels of Grande Asset, a Japanese hotel of Property Perfect and two community malls comprising Metro West Town and Metro East Town will be the underlying assets. The three hotels are valued 3.7 billion baht, while the two malls are valued at 1.8 billion.
To further reduce its D/E, Property Perfect is expected to earn massive revenue from selling three plots of land in the second half including a 17-rai plot on Sukhumvit Soi 103 near the Bang Na intersection for 1.7 billion baht to City Realty, owned by Chali Sophonpanich and The Mall Group.
A 110-rai plot on Chaeng Watthana Road will be sold to Sansiri Plc for 500 million baht. Afterwards, Property Perfect will have 600 rai remaining for future developments.
Another 160 rai of land on Krungthep Kreetha Road will be sold for 870 million baht to two SET-listed developers.
Property Perfect plans to set up a property fund to sell Uniloft Chiang Mai for 500 million baht in the fourth quarter.
The company projects earnings of 3.57 billion baht with a 35% gross margin, improving Property Perfect's net profit growth by more than 10% this year.
PF shares closed yesterday at 1.30 baht, down 13 satang, in trade worth 1.20 billion.
GRAND closed at 1.67 baht, down 18 satang, in trade worth 359 million.