PF selling assets to boost equity
SET-listed developer Property Perfect (PF) plans to sell assets worth a combined 10 billion baht to reduce debt as the property market slows down in line with the sluggish economy.
Chief executive Chainid Adhayanasakul said the property market will be downbeat in 2020-21 as there are negative factors dampening the economy and market sentiment.
"The impact of the novel coronavirus in the tourism industry in the first half will affect all business segments," he said.
"The delay in the fiscal budget will also affect the economy this year."
One of the three largest assets up for sale is a portion of PF's 98% stake of Royal Orchid Sheraton Hotel, under the possession of Grande Asset Hotels & Property (GRAND), a SET-listed firm and PF subsidiary.
"We want to maintain a 51% stake to control the majority. The hotel has a great location opposite IconSiam, a popular destination for Chinese tourists. Last month this hotel recorded 90% occupancy, its highest yet," said Mr Chainid.
The company is in negotiations with Asian investors who want to buy the stake, valued at 2.5 billion baht.
The deal should be finalised by mid-2020, he said.
There are two plots in the Ram Intra area worth a combined 2.5 billion baht, comprising 15 rai and 40 rai leasehold land under 30-year contracts.
Lastly, PF has a plot worth 2.5 billion baht on Ratchadaphisek Road near the Chinese Embassy owned by We Retail, a subsidiary for retail business.
A deal for this last asset may be delayed until early next year, said Mr Chainid.
Two plots, one in Chiang Mai and another on Chaeng Watthana Road, worth 500 million baht each, will also be put up for sale.
PF also plans to transfer Yu Kiroro condos worth 1.5 billion baht in Hokkaido, Japan this year to repay the project's debt.
PF aims to reduce its debt-to-equity ratio from 1.7 times to 1.2 times, assuming all targeted assets are sold.
If 80% of assets are sold, it will reduce the debt-to-equity ratio to 1.5 times.
“In the first nine months last year we recorded more than 1.4 billion baht in a net profit, the highest in 16 years, mainly due to the sale of assets which we posted 2.3 billion baht,” said Mr Chainid.
PF shares closed yesterday on the Stock Exchange of Thailand at 0.90 baht, down one satang, in trade worth 4.54 million baht.
GRAND shares closed on Wednesday on the SET at 0.70 baht, up three satang, in trade worth 442,040 baht.