By THE NATION
Dusit Thani Freehold and Leasehold Real Estate Investment Trust (or DREIT) has applied to the Securities Exchange Commission for a public offering of 365 million units to expand its investment to acquire up to Bt2.3856 billion of Dusit Thani Maldives by the third quarter of this year, the fund’s manager, Sarnthor Mudhasakul, said yesterday.
The financial advisor noted that the proposed investment would strengthen the REIT and diversify its revenue bases internationally and beyond local hotels, as well as its customer bases. The investment would likely not reduce the cash distribution per unit, but it would enlarge the REIT’s size, which could lead to improved trading liquidity, borrowing capacity and credit rating, he said.
Sarnthor, who is also managing director of Dusit Thani Properties REIT Co Ltd, said that SEC is reviewing the application to make a rights offering/public offering of up to 365 million units and was expected to grant it by the third quarter of this year.
Proceeds of the offering would partly finance the investment in Dusit Thani Maldives, a major five-star hotel on a 46-acre plot on Mudhdhoo Island in Baa Atoll, Maldives. The plot is a leasehold estate with a remaining lease period of more than 40 years. The total investment cost would not exceed Bt2.3856 billion.
“Dusit Thani Maldives is a resort with uniquely designed villas that demonstrate a perfect blend of local beautiful architecture and landscape, and Thai-style decorations. It has become a popular tourist destination, recording an average occupancy rate of 84.43 per cent in 2018. In addition to this property, DREIT's manager seeks to actively manage the REIT by acquiring more promising, high-quality properties as a way to retain the REIT’s growths and stabilise long-term returns to the unitholders,” Sarnthor said.
The company’s financial advisor, Napat Wattanathissatharn, executive vice president of CIMB Thai Bank Plc said that additional investment would further stabilise DREIT’s shared rental revenue through enhanced asset diversification. It would add an overseas property to the asset portfolio, which currently consists of three hotels in Thailand – Dusit D2 Chiang Mai Hotel, Dusit Thani Laguna Phuket Hotel and Dusit Thani Hua Hin Hotel.
The investment would also diversify its customer base. In particular, the share of frequent individual travellers segment would jump to 86 per cent from 75 per cent. Rental revenue would flow to DREIT more regularly all year round, as the tourist-season-influenced H1/H2 ratio would shift to 60.18 per cent/39.82 per cent from 68.48 per cent/31.52 per cent. In addition, less reliance on Thai customers would be achieved.
“The investment would add a promising premium-grade asset to DREIT’s portfolio, and it would not reduce the cash distribution per unit,” noted the banker.
The capital raise would enlarge DREIT’s total asset value to a maximum of Bt7.036 billion from Bt4.554 billion. This could lead to improved trading liquidity and healthier investment interest, as well as higher borrowing capacity and a higher credit rating, all of which could, in turn, be translated into greater returns per unit in the future, Napat said.