Tesco Lotus launches Thailand's biggest property fund

The proceeds will be used for store renovation, said Sompong Rungnirattisai, property director for Ek-Chai Distribution System Co, which operates 133 Tesco Lotus stores in Thailand. Phatra Securities will be the financial adviser.
The Tesco Lotus Retail Growth Freehold and Leasehold Property Fund (TLGF) will earn revenue from rental fees at 17 shopping malls anchored by Tesco Lotus stores, and Tesco will lease its hypermarkets from the fund. Tesco has previously raised funds from selling and leasing back British stores to finance new outlets.
“For more than 17 years, Tesco Lotus has been at the forefront of the Thai retail industry, pioneering modern and innovative products, services and solutions that create value for our customers and the industry,” Sompong said.
Somchai Boonnamsiri, chief executive officer at Krung Thai Asset Management, which acts as the lead underwriter, said the fund was likely to attract investors because of its large size and Tesco Lotus’ strong position in the retail business.
“TLGF is set to capitalise on the robust growth of the Thai retail industry and the proven track record of Tesco Lotus’ successful operation over the past 17 years. The property fund also has strong growth prospects thanks to the visible asset-acquisition pipeline of Tesco Lotus’ existing and future shopping malls,” Somchai said.
Two or three new Tesco Lotus stores are expected next year.
The fund’s yield is expected to be higher than other Thai property funds, which see an average annual yield of 78 per cent.
TLGF will hold a roadshow in Thailand on February 20, followed by visits to Singapore and Hong Kong.
Tesco will own a 33percent stake in the fund under the Securities and Exchange Commission’s rules while a 50percent stake will be offered to retail investors and the remainder to foreign and local institutional investors.