SET-listed Strategic Hospitality Extendable Freehold and Leasehold REIT (SHREIT) will invest in two hotels in Malaysia and Indonesia worth a combined 5.8 billion baht, targeting robust growth in tourism in these destinations.
With the investment deals, SHREIT's assets under management (AUM) will reach 10 billion baht by year-end, becoming the largest hotel REIT (real estate investment trust) in Thailand.
SHREIT announced its decision to invest in two Asean hotel properties: Sofitel Bali Nusa Dua Beach Resort in Indonesia and Hilton Garden Inn Kuala Lumpur in Malaysia.
SHREIT will borrow approximately US$62.5 million (2.05 billion baht) and issue up to 415 million units, of which at least 50% will be offered to existing unit holders for at least 50%, and the rest for the public.
The investment and fund-raising process is expected to be executed in this year's final quarter.
There is confidence in the properties' potential due to growth in the number of local and international tourists visiting these countries, said James Lim, executive director of Strategic Property Investors Co Ltd (SPI), an independent REIT management firm and manager of SHREIT.
Mr Lim said the Bali hotel will be a 50-year leasehold, with 398 guestrooms, 17 villas and a comprehensive range of facilities, including large conference rooms and event venues that are suitable for international meetings, incentives, conferences and exhibitions.
Bali is an international tourist destination that is visa-free for tourists from 169 countries, he said, noting that the province posted average tourist growth of 14.6% per year for the past 10 years.
For the hotel in Malaysia, it will be a freehold interest with 532 guestrooms located in Chow Kit, a district neighbouring Kuala Lumpur's city centre, Mr Lim said.
He said Kuala Lumpur records constant growth in the number of tourists, with annualised rates for the past 10 years at 4.8% for international tourists and 12.3% for local tourists.
SHREIT plans to invest in Myanmar in 2019, targeting an international hotel brand where the first investment sum is expected at $30-40 million, Mr Lim said.
Investment in Thai hotels is not on the radar because prices are quite expensive and competition remains high, while investment yield is around 4-5%, lower than 10% seen in regional markets, Mr Lim said.
SPI managing director Patan Somburanasin said SHREIT is in the process of a credit rating evaluation by Tris Rating. Once the evaluation is completed, the company can increase the loan ceiling maximum from 35% to 45%.
