Bangkok--7 Dec--Master Mind Communications
DTCPF Schedules 7 - 17 December for IPO, Offers 4-year Rental Guarantee in 3 Premium Hotels of at least THB 381 million p.a. with strong demand from institutional investors at 2.05x over bookbuilding
The IPO period of DTCPF will be 7 - 17 December. The par value will be THB 10 each and the minimum subscription value will be THB 10,000. Kim Eng Securities (Thailand) and CIMB Securities (Thailand), the fund’s designated co-underwriters, revealed that the forecasted return of DTCPF from 4-year rental guarantee will be at least THB 381 million per annum, excluding related expenses, which can be comparable to the combined rate of return between freehold and leasehold property funds in the SET. The co-underwriters have expressed their confidence in the attractiveness of the fund’s key advantages, including its investments in three premium hotels in three prime locations and the potential of constant rate of returns for investors. The market response is satisfactory after nationwide roadshows. The institutional investors demand for investment in the fund is 2.05 times higher than the allocated portion, as the offered rate of return is on par with the average of other property funds. Any subscriber of THB one million or more in DTCPF will get a ‘DTCPF Prestige Card’, which entitles the holder to enjoy previleged benefits from 22 local and overseas Dusit hotels and resorts.
On 2 December 2010, Dusit Thani Freehold and Leasehold Property Fund “DTCPF” held a signing ceremony for appointment of its underwriters. The investment policy of the THB 4,094 million 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. It will be open for subscription during the Initial Public Offering (IPO) period of 7 - 17 December at the par value of THB 10 each and the minimum subscription value of THB 10,000.
The underwriters of the fund are CIMB Securities (Thailand) Co., Ltd. and Kim Eng Securities (Thailand) PCL. In addition, CIMB Thai Bank PCL and Krung Thai Bank PCL have been designated as selling agents to utilise their countrywide branch networks for marketing.
Mr Chanin Donavanik, Chief Executive Officer of Dusit Thani PCL (DTC), revealed 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 invest in 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.
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 wholly-owned subsidiary of DTC will lease the three hotels from the fund at fixed and variable rental rates in order to provide investors the opportunity to receive potential stable returns.
Mr Somchai Boonnamsiri, Chief Executive Officer of Krung Thai Asset Management PCL (KTAM), the Fund Manager of DTCPF, said that, in addition to the key advantages of Dusit hotels, DTC as the property owner also offers annual rental guarantee of the three hotels in the first four years of at least THB 381 million per year relative to its fund size of THB 4,094 million. Nonetheless, if investors would like to estimate the fund’s intrinsic rate of return, they should also take into consideration of related fund expenses, comprising of establishment costs, fund administrative costs and hotel renovation expenses. In this connection, a bank guarantee of THB 125 million per year will be provided and the fund anticipates that it will be able to declare dividend payment twice a year.
Mr Montree Sornpaisarn, Chief Executive Officer of Kim Eng Securities (Thailand) PCL, the fund’s Financial Advisor and Co-underwriter, noted that the property fund is an option that is very attractive and suitable to the current investment climate, as it offers an opportunity to receive stable returns at potentially satisfactory rates. This fact is confirmed by the active response received from the investors after the fund’s roadshows in various locations, including Chiang Mai, Khon Kaen, Phuket, and Bangkok. The investors find the outlook for hotel industry promising.
Mr Sittichai Mahaguna, Head of Corporate Finance & Equity Capital Market, CIMB Securities (Thailand) Co., Ltd., another Financial Advisor and Co-underwriter, believes that many institutional and retail investors are interested in the investment in DTCPF, as they are confident about the expertise in hotel management of Dusit, the prime locations of the hotels and the growth potential of Thailand’s tourism industry. CIMB Securities and Kim Eng Securities as the Financial Advisors and KTAM as the Fund Manger are now fully ready to make the IPO for this fund.
Of the THB 4.094 billion units, about 30% will be held by DTC and the remainder by institutional and retail investors. The fund has so far been well-received by the institutional investors, including other mutual funds. The result of the bookbuilding process indicates that the demand is 2.05 times higher than the number of investment units apportioned to the institutional investors, while the fund’s rate of returns is on par with other property funds’.
On average, freehold property funds offer the rate of returns at approximately 7% while leasehold property funds at around 9% (source: the SET). With the freehold to leasehold investment ratio of 76:24, DTCPF would be likely to generate returns similar to the average rate of other property funds in the market. Compared to smaller property funds, the sizable fund size of DTCPF should also enhance its trading liquidity. This makes the underwriters confident about a good response from retail investors during the IPO period in this early December.
DTCPF is also organising a promotional campaign. Any investor who subscribes THB one million or more of units in the fund will receive a ‘DTCPF Prestige Card’, which entitles the holder to receive numerous previleges from Dusit International’s hotels & resorts, including 10% discounts from 22 local and overseas Dusit International’s hotels and resorts and special offers and benefits in relation to room booking, restaurants and other Dusit services.
DTCPF will be open for subscription during 7 — 17 December 2010. For more information, please contact KTAM (0-2670-4900), Kim Eng Securities (0-2658-6300) or CIMB Securities/CIMB Thai Bank (0-2626-7777).