One Asset Management prepares to offer TIREIT units
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One Asset Management prepares to offer TIREIT units

One Asset Management (ONEAM) is preparing to unveil Thai Industrial Real Estate Investment Trust (TIREIT) units for general investors to cash in on the changing investment landscape.

As the period of high interest rates ends, alternative assets such as TIREIT are again an option for investors to diversify risks in their portfolio.

The company plans to offer TIREIT units to general investors from Oct 7-18, said chief executive Pote Harinasuta.

ONEAM is introducing TIREIT, which has been converted from Thai Industrial Fund 1 (TIF1), to the portfolio and increasing investment, he said.

"We view that the Thai economy is going to recover continuously for the rest of the year after several sectors including government spending, investment and consumption started to improve," said Mr Pote.

A clearer domestic political scene is another factor boosting short-term investment sentiment, while the Federal Reserve has been clear about its interest cut direction.

The Bank of Thailand's monetary policy has remained tight, with ONEAM predicting the Thai policy rate would be kept unchanged at 2.5% in 2024, dipping to 2% next year.

Mr Pote says the company plans to offer TIREIT units to general investors from Oct 7-18.

Mr Pote says the company plans to offer TIREIT units to general investors from Oct 7-18.

"We believe the Thai economy lends support to TIREIT because it offers sustainable returns, making it more appealing to investors again," he said.

After the conversion, TIREIT has higher potential to increase purchases of assets to boost rental income, said Mr Pote.

TIREIT is the only type of trust in Thailand that has 100% freehold in land and buildings in leading industrial estates as well as warehouses which are likely to see valuation rise in the long term.

The current valuation of TIREIT, based on the cost approach method, is estimated at 2.25 billion baht.

In addition, the value of industrial estates and warehouses for rent has the potential to grow continuously looking forward.

Industrial land for rent is estimated to see growth of around 18-20% per year between 2023 and 2025, offering a good opportunity to invest in factories and warehouses later this year.

Based on the rental business data of the fourth quarter of 2023, the occupancy rate of completely built factories was as high as 81.8%, while that of warehouses was also high at 79.7%. These figures reflect solid demand for industrial land and warehouses for rent.

Looking forward, industrial land and warehouses for rent have ample room for growth substantially in line with economic growth, government measures to drive public investment, as well as investment expansion and relocations of foreign companies to minimise risks of supply chain disruption.

Another supporting factor is the solid growth of express delivery in Thailand from e-commerce and logistics businesses. All of these factors support the potential of revenue growth from rental industrial land and warehouses to expand sustainably in the future, said Mr Pote.

TIREIT now offers a return on dividends of 7%, up from 5.8% before the conversion and the increase in investment, in line with estimated returns of industrial REITs this year and next of around 8% per annum with the majority of assets in the form of leasehold, as of Aug 30, 2024.

"The major difference is that TIREIT has all freehold assets," said Mr Pote, suggesting that investors look for stable income in the long term to invest more in TIREITs.

Mr Pote further explained that with TIREIT being converted from TIF1, the assets are divided into two parts.

First is the previous assets of TIF1 which would be transferred to TIREIT with 100% freehold in land and buildings in several industrial estates and investment promotion zones including Hi-Tech Industrial Estate, Bangkadi Industrial Park, Bang Pa-In Industrial Estate, Amata City Industrial Estate and TFD Industrial Estate.

Another part is assets gained after the transformation from TIF1, which are 100% freehold as well. These include Green Park comprising Green Park 1 in Chachoengsao and Green Park 2 and Green Park 3 in Samut Prakan. Those assets have occupancy rates of 100%.

The occupancy rate after the transformation and increase in investment stands at 80%. Renters are Thai and foreign businesses from various sectors, such as industrial materials and machinery, automotive, packaging, food and beverage, and medical supplies.

The trust generates recurring income from rent paid monthly. There are more than 30 small-scale renters. Over the past 20 years, half of the rental contracts have been renewed. All the contracts are renewed every three years.

The management company for TIREIT assets is JCK International Public Co Ltd.

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