Property Funds (incorporated) In Thailand

[The_Moog]

Anyone know about these new corporate vehicles?

I have a fair number of buddies who are rich Wall Street types who have the romantic idea of buying Thai coastal property, but don't want to go it alone, or set up their own holding companies, or do all the routine paperwork.

Combining them all - one would have to set up a company, which could issue shares, but given the 51% Thai ownership, perhaps via some Preference Share structure. I don't think subordinated or mezzanine would appeal to them, as they'd want equity.

I would ask for a free carry on a percentage naturally.

[Harmonica]

Anyone know about these new corporate vehicles?

I have a fair number of buddies who are rich Wall Street types who have the romantic idea of buying Thai coastal property, but don't want to go it alone, or set up their own holding companies, or do all the routine paperwork.

Combining them all - one would have to set up a company, which could issue shares, but given the 51% Thai ownership, perhaps via some Preference Share structure. I don't think subordinated or mezzanine would appeal to them, as they'd want equity.

I would ask for a free carry on a percentage naturally.

A certain level of commonsense should prevail when asking questions of this calibre.

The question is absolutely sound () but posting it at Idiot Central is not smart. Heck, even the visa forum section, which this site is supposed to be based on, has so much controversy, that it is just a complete waste of time trying to figure out who/what is right or wrong.

PM will arrive in your box next week as to how its done.

Good stuff, Moog.

[thedude]

these are not new vehicles. there are categories of prop funds here that allow 100% foreign ownership, such as the Type I to IV funds. in fact they were created by the government quite specifically to help move stranded assets in the wake of the financial crisis. basic rules - must be at least 500 mb, original asset owner cannot hold more than 30% of the fund (but there are ways around this), asset must be substantially developed (ie not raw land), there must be a certain number of unit holders (can't remember exact number but quite a lot and a big hastle to set up) etc... i think most if not all of the Type IV licenses have expired by now because they were issued with a deadline within which to capitalise the vehicle. anyway, the long and short of it is you can still look at Type I funds which allows you to raise public capital, ie you can IPO the thing. but of the 2 or 3 Type I's listed so far the performance has been dismal because they were used simply as a dumping ground for bad assets. i see the Type I environment as under-exploited, like any fund, you need a clear strategy and the ones so far have been quite clueless. recently the Central Group went on a roadshow to raise capital on a sort of CR-REIT format, closed-end deal which did look interesting. but otherwise, frankly i think thailand is not ready for REITs as yet, supportive tax and corporate regulations are needed (imagine the tax dept actually talking to the SEC), furthermore i don't see a secondary institutional market, meaning that exit options are poor. compounding the issue, high bank liquidity and pension funds taking yields of 4.5%! anyway, i might have some reading material burried somewhere, PM me if interested.

[Sumitr Man]

Dude:

I believe the Type I - IV property funds are no longer available. They were primarily established to help out following the '97 crash.

SM

[The_Moog]

Yes, its not the 100% owned foreign funds per distressed debts that I was envisaging

This is more of a hybrid REIT structure.

[Sumitr Man]

As it happens, I was reading about Thai[;and] REITs just yesterday:

IPO Under Way for Thailand’s Largest REIT

By Brian K. Miller

Last updated: August 3, 2005  09:57am

BANGKOK-Central Pattana Public Company Ltd. is launching Thailand’s largest property trust with a $265 million (baht 11 billion) initial public offering that began Monday and ends next Tuesday. There are only a handful of property trusts in Thailand and this fund, the first in Thailand to be focused on retail, is six times larger than any of the others.

Locally based Central Pattana is purchasing 33% of the investment units in the property trust, which is called CPN Retail Growth Property Fund. Other investors include the California Public Employees' Retirement System, International Finance Bank, Asian Development Bank, DEG (a member of Germany's KfW Group) and the Ministry of Finance of the Government of Thailand.

Proceeds from the IPO will be used to purchase certain buildings and leasehold rights on two shopping malls: Central Plaza Rama 2 (2.7 million sf) and Central Plaza Ratchada-Rama 3 (1.8 million sf). The fund will have a 20-year leasehold right on Central Plaza Rama 2 and an effective 90-year leasehold right on Central Plaza Rama 3.

Similar to U.S. REITs, the fund is required to payout at least 90% of net profits as dividends, which will be paid up to four times a year. Revenues from the fund will mainly come from fixed rental contracts with varying maturities. The dividend yield to investors of the fund for the first 12 months is expected to be 7.30%, according to the fund’s sponsor and Central Pattana board member, San Francisco-based Lombard Investments. Lombard's Thailand Equity Fund invested approximately $24 million in Central Pattana to help finance the redevelopment of Central World Plaza and provide capital for other acquisitions. Central Pattana was founded in 1980 and has grown to become one of Thailand's top developers and operators of major shopping malls and office buildings, primarily in the Bangkok Metropolitan Area. Central Pattana owns nine shopping malls with total retail space of approximately 5.7 million sf.

Source http://www.globest.com/retail/news/gsrglobal/15931-1.html

[thedude]

Dude:

I believe the Type I - IV property funds are no longer available.  They were primarily established to help out following the '97 crash.

SM

<{POST_SNAPBACK}>

yes that is what i said in my post if you read it carefully. i think the last of the type IV licenses expired sometime in 2004.

but my understanding is that Type I may still be possible. perhaps i misunderstood?

The_Moog, what is the difference between a Type I fund and the "hybrid" REIT you refer to? there is no requirement for the asset to be a distressed one, although the allowable structure made it easy for foreigners to buy them.

[Sumitr Man]

Dude:

My mistake - I thought Type I funds were also closed now. However, reading the SET website you may be able to purchase units in a Type I fund, but I don't think you can establish one from new.

http://www.set.or.th/en/operation/trading/fund_p1.html

I could be very wrong on that though, as I don't think the SET website makesit clear at all.

SM

[Wekhin]

How much (percentage of equity) do your investors want?

If possible, please email me at [email protected]