Strategic Property Investors (SPI), an independent REIT manager with a focus on Asean assets, has set up its Strategic Hospitality Extendable Freehold and Leasehold real estate investment trust (SHREIT) to raise up to 5.4 billion baht for investment in three hotels in Indonesia and Vietnam.
This is the first hospitality REIT operated by an independent REIT manager in Thailand.
The three hotels, which have a combined 632 rooms, are Pullman Jakarta Central Park and Capri by Fraser in Indonesia, and IBIS Saigon Sough in Vietnam, said executive director James Lim.
Pullman Jakarta Central Park in Indonesia has stable cash flow supported by local customers, who represent 39% of the total. Customers of Capri by Fraser are typically long-stay business travellers, while IBIS Saigon South focuses on customers in the tourism segment.
"Diversity in locations and customer groups will help stabilise our revenue and generate a healthy investment return," said Mr Lim.
The initial fund raised from SHREIT will not exceed 5.2 billion baht and will include subscription of trust units with a combined value of no more than 3.74 billion, as well as 1.68 billion in loans from financial institutions.
Veena Lertnimitr, executive vice-president of Siam Commercial Bank (the financial adviser and underwriter), said the estimated returns are in the range of 7.67-7.72% per year, as disclosed in the prospectus. The subscription will be held in mid-December.
The trust will be listed on the Stock Exchange of Thailand as a secondary market this year. The investment trust will be offered to business partners, parties related to the REIT manager, institutional investors, foreign initial purchasers, patrons of the underwriters and general investors.
Managing director Patan Somburanasin said the company is looking to invest in 3-5 hotels in Vietnam, Indonesia and Cambodia. The due diligence process for these properties is targeted to be completed by the first quarter of next year.
In 2018, SPI plans to raise 5 billion baht next by establishing new trusts and through borrowing, said Mr Patan.
"Our focus is on Asean assets. We are also looking for opportunities to invest in other assets like commercial REITs, and retail or office REITs in the region," he said.
The company plans to keep the debt level of the SHREIT below 30%, lower than the regulators' 35% cap, which rises to 65% if the fund is financed by bonds, he said.