Bhiraj Buri Group, a premium property developer, has set up a property real estate investment trust (REIT) to raise 6 billion baht for new mixed-use projects on Sukhumvit Road, aiming to make the area a landmark for consumer goods and e-commerce.
Bhiraj Office Leasehold REIT (BOFFICE) will invest in leasehold spaces in Bhiraj Tower at EmQuartier, the grade A office building in Sukhumvit's central business district, and all connected areas for a term of 26 years and nine months.
The inception was filed with the Securities and Exchange Commission on Nov 9 and is pending approval.
Atthakorn Netneramitdee, managing director at Bhiraj REIT Management, said the building started rental service in March 2015 and as of the end of September has an occupancy rate of 98.7% and total leased space of 49,700 square metres, with more than 8,000 workers.
The tenants comprise small firms and large multinational companies in different industries such as consumer products, e-commerce, pharmaceuticals and automotive.
Foreign companies make up 80% of tenants and domestic firms the remainder.
The rental space ranges from 130-2,000 sq m and the rental price is 850-1,200 baht per sq m.
"The largest tenant rents 2,000 sq m [of space] and contributes 7% of total rental revenue," said Mr Atthakorn. The rental price will be revised every three years, in line with the rental contracts, he said.
Mr Atthakorn said the BOFFICE's initial target assets will be to select long-term leasehold spaces of 94,853 square metres within the Bhiraj Tower at EmQuartier, including office space for rent, parking space, common areas for the offices and spaces for connected utility services.
"The office building along the Asok-Sukhumvit area has become a prime location for commercial, consumer goods, and e-commerce over the past few years as firms have migrated from Silom and Sathon, said executive director Pitiphatr Buri.
Mr Pitiphatr said the company will use the funds raised from the REIT to invest in other mixed-use projects in Sukhumvit's central business district, including Summer Lassale project and a new project that will be launched in the second half of 2018.
The investment will be up to 6.6 billion baht, to be raised by issuing REIT shares worth up to 5.153 billion, and securing long-term loans worth up to 1.75 billion.
The grade A office rental rate in central business district areas has increased by 6.5% over the past five years, making the REIT attractive said Sawat Srisaranyapong, head of investment banking at Kasikornbank, citing CBRE research.