Proud Real Estate Plc is set to fill a projected revenue gap in 2024 by acquiring two condo projects jointly valued at 8.6 billion baht from Noble Development Plc.
Pasu Liptapanlop, executive director of Proud, said next year the company expects to have a revenue gap attributed to a minimal number of ongoing projects which are scheduled to be completed in 2025.
"Apart from revenue recognition in the upcoming year, we will be able to broaden our customer base from the existing luxury segments to encompass middle-to-lower-end market segments," he said.
Proud Real Estate signed an agreement to acquire 100% of the common shares of Khu Khot Station Alliance Co (KK) and Phraram 9 Alliance Co (PA9) from Noble Development and TNL Alliance Co (TNLA).
KK and PA9 own and are developing two condo projects -- Nue Cross Khu Khot Station and Nue District R9. The total investment value of the acquisition would be around 1.73 billion baht.
Nue Cross Khu Khot Station, valued at 2.1 billion baht, achieved 100% of pre-sales, with unit transfers expected in January 2024.
Meanwhile, Nue District R9, valued at 6.5 billion baht, recorded 83% of pre-sales with revenue recognition projected in 2025.
Proud Real Estate aims to have 1.7-1.8 billion baht in revenue in 2023 from its existing projects as well as 2.1 billion baht in revenue generated entirely by Nue Cross Khu Khot Station.
In 2025, it forecasts 8.6 billion baht in revenue which would comprise 6.5 billion baht from Nue District R9 and 2.1 billion baht from its own projects, said Mr Pasu.
Proud Real Estate would propose a capital raising of 2.49 billion baht at its extraordinary general meeting.
This would include a rights offering to its existing shareholders at a ratio of 1.8 existing shares to 1 new share, priced at 1.75 baht per share, with a total value of no more than 624 million baht.
The remaining portion would be raised through loans from financial institutions to strengthen the company's capital and liquidity, amounting to around 1.89 billion baht.
"The estimated gross margin for these two projects is anticipated to exceed 30%, with an expected net profit margin of around 10%," he said.
"Acquisitions like this deal are uncommon for us as we prioritise minimising risks associated with unfamiliar entities. Having Noble as one of our shareholders will instill greater confidence in our decision."
Thongchai Busrapan, co-chief executive of Noble Development, said the company intended to purchase shares of Proud, but the amount would not be significant, as the primary objective was to demonstrate its commitment to the partnership.
"Although holding onto the two projects for a few years could potentially yield higher profits, selling them now would enable us to reinvest in new projects," Mr Thongchai said.