Bangkok--27 Sep--Polyplus PR
KE Group is partnering with BBL Asset Management Co. Ltd. to establish a real estate investment trust (REIT) that will invest in lifestyle retail and community mall properties throughout Thailand and in Asia. The Bualuang K.E. Retail Leasehold REIT, or "BKER" for short, is planning to invest in 10 properties with a Total Asset Value of 11.3 billion Baht, which will make it a top-2 largest retail REIT in Thailand when it converts from the existing "CRYSTAL" Property Fund into the "BKER" REIT later this year. KE Group expects that with the active co-REIT management, a vertical business model, and leveraging technology, BKER is poised to grow 30% annually.
Supanavit Eiamsakulrat, Chief Executive of KE Group, states that BKER will create a strong and robust platform for growth in the retail real estate industry, with an initial listing value of 11.3 billion Baht and potential to grow at an annual pace of 30% through both organic growth and the acquisition of 3-5 new lifestyle retail and community mall properties every year. KE Group, the developer of Crystal Design Center, The Crystal, and luxury housing projects such as Crystal Park and Grand Crystal, is partnering with BBL Asset Management, one of the largest asset managers in Thailand, to create Thailand's first REIT that will have "Co-REIT Managers" by bringing the complementary strengths in retail and in fund management together. BKER will be formed from the conversion of the 4 billion Baht CRYSTAL Property Fund – which owns the leasehold right to parts of Crystal Design Center and The Crystal Ekamai-Ramindra – and the additional investment in 10 new assets including Crystal Design Center, The Crystal Ekamai-Ramindra, The Crystal SB Ratchapruek, Amorini Ramindra, I'm Park, Plearnary Mall, Sammakorn Place Ramkamhaeng, Sammakorn Place Ratchapruek, Sammakorn Place Rangsit, and The Scene Town-in-town. The total gross floor area of the portfolio will be 498,365 sqm with a gross leasable area (GLA) of approximately 170,000 sqm. BKER has a carefully-selected investment strategy including looking at (1) location in a populous area with purchasing power and future growth potential, (2) high asset quality with good layout and convenient parking, and (3) strong tenant brands with high sales figures. The establishment of BKER has been very well received with numerous developers and asset owners now reaching out to BKER to begin studying and doing due diligence in order to acquire the assets for Phase 2 of the investment next year.
Kavin Eiamsakulrat, Deputy Managing Director of KE Group, explains the organic and acquisitive growth potential of BKER in lifestyle and community malls, "we view that both Occupancy and Rents are poised to begin a strong cyclical upswing after an adjustment period in the past few years and the significant decrease in forecasted new supply for community malls in the future that will result in less competitive market. Well-managed properties that are located in strategic locations and have good tenant mixes will benefit greatly and become winners. Additionally, by pooling together 10 properties, economies of scale and synergies are created, and can result in better revenue management, cost reduction, and centralization. On the other hand, there are numerous opportunities for further acquisitions in Bangkok, other provinces in Thailand, and abroad in neighboring countries. Many of the developers and owners of the properties are small- and medium-sized companies who are looking for a strong and high-expertise partner like BKER to come in to operate their malls. For investors, the BKER offers an attractive yield with promising growth prospects from the upzoning regulation and mass transit."
Once listed, BKER will be a Top-2 largest retail REIT by book Asset Value and will be the most diversified retail REIT in Thailand (Table Below):
"According to CBRE, there are 7.7 million sqm of retail space in Bangkok, of which 3.55 million sqm is owned by large listed companies and the remaining 4.15 million sqm is owned by SME developers."
"In the last quarter, the occupancy rate of prime community malls stood at 95% compared to only 90% for enclosed shopping malls. At the same time, the proportion of tenants in community malls that are at risk of being disrupted by e-commerce (online at risk) is only 20% compared to 40-50% in traditional enclosed shopping malls."
Consumer behavior is rapidly changing in this day and age, with consumers looking for new, unique experiences and focusing more on health and wellbeing. Traditional shopping for goods is declining while consumers increasingly buy online. The tenant mix in community malls, by nature, is heavily weighted towards experiential tenants such as Food & Beverage, Supermarkets, Fitness, Beauty, Fitness, Education, and Banking. This makes community malls much better suited and resilient in the new online-offline world.
KE Group is preparing to manage BKER by planning a customized strategy on leasing, marketing and events to each mall. KE Group has implemented "Yardi" the world No.1 real estate ERP software from USA, its software has been widely used by global big players with over 1 trillion sqm. over 80 countries, and will be the first Thai company who employs this software. KE Group will also launch a new application this year called "Crystal Rewards" which will be the most beneficial customer management app, its hit features included the shop and restaurant discount, easiest points collection by receipt, and lucky draw. Crystal Club database system is the in-depth data base and analytic system called "Agora Pulse" that analyzes the digital marketing system of various tools and peer comparison. The free wifi that offers to customers to enhance the engagement. The operation management that can increase the efficiency and minimize the cost i.e. machinery and equipment. At last, the major value is the synergy in all aspects.
Another core area of focus is in Tenant Services, where KE Group is finding ways to help support tenants future expansion. First, by working with major banks such as Bangkok Bank, K Bank, and Siam Commercial Bank to provide tenant financing. Second, introducing the accounting software "MAC 5" by Double Pine Co.Ltd. which automatically links directly to POS. Thirdly, proposing the digital payment gateway "Omise" to lead to more transaction for the on-line commerce. Fourth, joining with tech apps, website and software to enhance for tenants i.e. grab, line or market place for building material and others. Fifth, conducting seminar for tenants in variety of subjects to add knowledge in boosting sales and strategy for future economic trend. Moreover, CDC has launched CDC service or free personal shopper to advise on choosing materials and decorative products including price comparison. CDC also sets up the center of info on LEED, GREEN or other sustainability standards, it aims to give knowledge and products that can save energy, water and environmental friendly. CDC nowadays become the center of World products No.1 showroom in all major materials, those include marble, composite marble from Italy, crystal chandelier from Egypt, carpet from Belgium, Kohler artist gallery at CDC, the leading luxury Kohler collection showroom of southeast Asia. The major players in material products recently introduce innovation products include Crocodile paint group, Conwood high quality cement board group, SCG new tech products and building material, Toto sanitary showroom and SB design square new expansion phase just recently present showroom at CDC as the No.1 flagship showroom with largest selection of luxe and new innovation of furniture built-in system.
KE Group is emphasizing technology and global tech venture and investing in start-up whose technology and advanced software will help grow the company. KE Group has signed the agreement to be the Founding Corporate partner, as only one of four corporate in Thailand (KE, PTT, Thai Oil and BDMS group) with Plug and Play Tech Center, the largest Tech ecosystem from Silicon Valley, California, USA. Plug and Play has been know has the founding investor of global giant tech company i.e. Google, Paypal, Dropbox and more. KE Group is aim to focus on the smart cities tech, real estate tech and related to upgrade Thai real estate to the world class level which clearly displays as top-ten global largest companies mainly are tech companies.
In property development, KE has continuous expanded, the latest most luxurious housing project "Crystal Solana" with price range 65-300 MB will be launched in mid November. "111 Praditmanutham", the most trendy office on 6-rai land 20,000 sq.m. on Ekamai-Ramindra road with the new fun and creative service that induce employees to say yes to come work. KE Group has also has established new investment in New York by having new exclusive project in Williamsburg, the most in trend and popular hip area, the current status is under design and prepare for construction. K.E. also has other venture and investment in related sectors.
In summary, the partnership between BBL Asset Management and KE Group to launch BKER will create a new benchmark for the retail real estate industry in Thailand. It will not only strengthen the lifestyle community malls and increase opportunities and growth, but also will support tenants in increasing sales and providing better management systems. Customers will benefit from the standardized level of service and experiences; while investors will have a quality and diversified investment opportunity. Lastly, it will be a strong driver of the economy.