Bangkok--3 Nov--Master Mind Communications
Dusit Thani PCL has prepared to offer the Dusit Thani Freehold and Leasehold Property Fund - DTCPF within this year-end with the total fund size approximately THB four billion. Once emerged into Thai bourse, it will be the largest amongst hotel property funds and the first of its kind in terms of the diversification of assets in three prime tourist destinations. DTCPF comprises the ownerships in Dusit Thani Laguna Phuket and dusitD2 chiang mai and 30-year leasehold investment in Dusit Thani Hua Hin. KTAM indicates the high growth potential of the three hotels with well-structured DTC’s rental income guarantee for the first four years.
Bangkok — Mr Chanin Donavanik, Chief Executive Officer (CEO) of Dusit Thani PCL, revealed his company’s plan to launch an Initial Public Offering (IPO) of units in Dusit Thani Freehold and Leasehold Property Fund - DTCPF. The investment policy of the THB four billion fund includes the acquisition of freehold interest of Dusit Thani Laguna Phuket and dusitD2 chiang mai and 30-year leasehold interest of Dusit Thani Hua Hin.
DTCPF will be regarded as the first hotel property fund that will invest in multiple hotels as a way to diversify its inherant risk. Meanwhile, with the size of over THB four billion, it will be the largest of its kind listed on the Stock Exchange of Thailand (SET). Dusit Management Co., Ltd., a subsidiary of Dusit Thani PCL (DTC), will hold 99.99% shares and will lease the three hotels from the fund at fixed and variable rental rates in order to gain confidence from and provide security in terms of returns to the investors. The fund’s incorporation is pending approval of the Securities and Exchange Commission (SEC).
Mr Somchai Boonnamsiri, Chief Executive Officer of Krung Thai Asset Management PCL (KTAM), the Fund Manager of DTCPF, said that the fund will acquire freehold interests in land, buildings and utilities as well as furniture, property, fixtures and equipment of Dusit Thani Laguna Phuket and dusitD2 chiang mai and will have a 30-year leasehold interest in land, buildings and utilities and own furniture, property, fixtures and equipment of Dusit Thani Hua Hin, with the freehold portion representing over 75% of all investments.
In addition to the key advantages of Dusit hotels which are located in a variety of attractive destinations highly popular among both local and foreign tourists, DTC also offer annual rental quarantee from the three hotels in the first four years, so that the investors can enjoy dividend payouts at satisfactory rates.
“DTC as the property owner will provide a bank guarantee as security against rental payments to the fund over the first four years. This will boost the investor’s confidence in terms of safe returns and the mixed policy of investing in both freehold and leasehold assets will ensure satisfactory and appropriate rates of returns for the investors,” said Mr Somchai.
Mr Montree Sornpaisarn, Chief Executive Officer of Kim Eng Securities PCL, the Financial Advisor, noted that in terms of assets value Dusit Thani Laguna Phuket is in the top rank, followed by Dusit Thani Hua Hin and dusitD2 chiang mai, respectively. This is in line with the fact that Dusit Thani Laguna Phuket achieves the highest average occupancy and average room rate, hence the highest income-generating capacity. Moreover, DTC has over 60 years of experience in hotel management and “Dusit” is an internationally recognised regional brand. These made him believe that the three hotels, all of which are in high-potential locations, will grow and create good returns for investors in DTCPF.
Mr Montree added that the property fund is an option that is very attractive and suitable to the current investment climate, as it offers constant and satisfactory returns if compared to bank deposits, and the fact that its income growth corresponds with inflation rates allows it to serve as a tool for inflation protection. As the interest rate has been very low and its increase has only been gradual, the deposit rates of returns will not likely be significantly higher. Therefore, a property fund investment offers good returns and inflation protection and is generally less risky than common stock investment.
Mr Sittichai Mahaguna, Head of Corporate Finance & Equity Capital Market, CIMB Securities (Thailand) Co., Ltd., another Financial Advisor, stated that many participatants in the seminar recently organised to share knowledge among local institutional investors have expressed their interests in the investment in DTCPF. They are confident about the expertise in hotel management of Dusit and find the diverse hotel locations a distinct advantage in terms of risk diversification. The large size of the fund which promises high liquidity in the secondary market also proves another favourable factor. Funds that are large enough and invest in multiple assets will gain acceptance from overseas investors, including those in Malaysia, Singapore and Hong Kong, which will, in turn, support desirable trading prices in the secondary market.
Further, it is believed that retail investors’ understanding about property fund instruments has been improving, as shown by the number of SET-listed property funds which have grown to over 30. Property fund investment is also likely a good alternative for depositors and can be used to diversify investment risks. It is an alternative to direct investment in property but offers greater flexibility owing to the size of investment and more liquidity. In addition, the tendency that the value of the assets, especially land, invested in by a property fund will increase by the rate of inflation makes the investors enjoy possible appreciation of assets like in the case of long-term property investment.
“We trust that DTCPF will receive a good response from both institutional and retail investors, particularly bank depositors. We also believe that the fund’s strengths, Dusit’s professionalism and the potential growth of tourism industry in Thailand’s tourist attractions will together make CIMB and Kim Eng as the Financial Advisors and KTAM as the Fund Manager fully prepared to launch an IPO,” said Mr Sittichai.