DTP Global REITs Management (DTPRM), a REIT management company under DTGO Prosperous (DTP), has launched DTP Hospitality Real Estate Investment Trust (DTPHREIT), a hotel and leasehold REIT to invest up to 4.107 billion baht in MQDC’s high-potential hotel business, with a condition that the former owner agrees to buy back the assets at the end of the investment period.
Ms. Wanida Suksuwan, Managing Director of DTP Global REITs Management (DTPRM), said DTPHREIT will invest in the following high-potential MQDC hotel properties and serviced apartments: 1. Waldorf Astoria Bangkok hotel subleasehold and leasehold rights; 2. Magnolias Ratchadamri Boulevard (MRB) serviced apartments including sublease rights; 3. U Khao Yai hotel. The REIT will not exceed 4,107 million baht in value.
DTPHREIT is a buy-back REIT with an agreement to sell the real estate back to the original owner at the close of the 3rd year from the date it invests. The former owner has an obligation to lease and manage the property ensuring the REIT’s stable income. The annual rental rate for both projects is about 217.49 million baht and a security deposit equal to 3 months of the rental fee assures DTPHREIT a stable income.
“With stable income and consistent returns from letting, the property owner pays a fixed rent so DTPHREIT can pay its unitholders the fixed-rate return of 7% per annum for 3 years. The owner also agrees to buy back the assets at the price invested by the REIT at the end of the 3rd year after the REIT invests, so unitholders will receive their full investment back at the end of the 3rd year,” said Ms. Suksuwan.
The REIT is set to offer investment units to institutional investors and/or ultra-high net worth investors through two underwriters, Yuanta Securities (Thailand) and DAOL Securities (Thailand). The trust is set to be registered in late September or early October with Krung Thai Asset Management as a trustee.
Mr. Visit Malaisirirat, CEO of MQDC, the property owner, said that the assets sold to DTPHREIT have very high potential, both in location and quality. For the fundraising purpose, he added that it is for supporting further investment, paying off debt, and supplying working capital.
“After the recent COVID-19 outbreak has eased gradually, many countries relaxed their safeguards and opened up for travel, more foreign tourists are now arriving fast, especially here in Thailand. The hotel sector is recovering fast too. Asset value has recovered as well. After 3 years, the company will therefore definitely be ready to buy back the assets. The specific assets sold to DTPHREIT are currently recovering very fast. In the recent COVID-19 pandemic, MQDC kept all its hotel staff, without a single layoff, ensuring the properties are ready to open and enabling normal operations as soon as the country opens.”
“The easing of the situation and the improved trend make us confident that tourism will return to drive the country's economy to grow again. Various tourism-related and service businesses will recover quickly. The hotels and serviced apartments sold to the REIT in a top location, close to city-centre tourist attractions and managed by an internationally renowned team, will benefit directly, enabling the group to manage and execute its agreement with the REIT, both in regular payments and the repurchase under the agreement,” Mr. Malaisirirat said.
About the properties
Waldorf Astoria Bangkok is a luxury hotel in Ratchaprasong in Central Bangkok with 171 rooms. The hotel is managed by HLT Waldorf Astoria, part of Hilton worldwide. Pre-Covid occupancy averaged 55% shortly after the hotel opened. The coronavirus outbreak had a high impact, as on hotels in capital cities around the world. In the first half of 2022, however, occupancy rates recovered sharply to 32%.
Magnolias Ratchadamri Boulevard Serviced Residences (MRB) has 99 luxury rooms, managed by Compass Hospitality, at Ratchaprasong in the heart of Bangkok at the same location as Waldorf Astoria Bangkok. MRB has been moderately affected by the coronavirus outbreak after foreign residents were unable to travel. In the first 6 months of this year, however, the occupancy rate recovered to 87%, mostly from long-term rentals for senior executives, both Thai and foreign, of large companies, as well as high-ranking officials and diplomats.
U Khao Yai Hotel is managed by Absolute Hotel Service, which has the experience and capability to manage internationally recognised hotels. The hotel, with 63 high-end rooms and suites, is near Khao Yai National Park and surrounded by natural forests. The hotel is popular among high-income Thai tourists with occupancy averaging above 80%. Occupancy declined to 64% during the COVID-19 crisis but rose to 81% in the first half of 2022 and is likely to continue to increase.
DTPHREIT will be offered to institutional investors and ultra high-net-worth investors from 19-23 September 2022, through distributing managers, Yuanta Securities (Thailand) Co., Ltd. and DAOL Securities (Thailand) Plc.
Get updates and more details at: https://www.dtphreit.com/