Recap acquires Mercury Tower
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Building earmarked for offices, plaza
Real Estate Capital Asia Partners has taken over the Mercury Tower, an empty office building formerly owned by Lehman Brothers, a now-defunct US investment bank, and plans to invest in property in China and Vietnam.
Suchard Chiaranussati, managing director and a founder of the Singapore-based property fund, said yesterday that he would develop this structure in the prime Wireless-Ploenchit area into an office building and shopping plaza.
Recap used Bt1.2 billion for the purchase and will spend Bt300 million to remodel part of the building for the retail section, he said.
Bankruptcy halts renovation
Lehman Brothers did not complete the renovation of the building because it went bankrupt during the US financial crisis in 2008.
The building has 25 floors and 60,205 square metres. Total leasable space is 24,900sqm, of which 18,700sqm is for offices and 6,200sqm for shops. It also has space to accommodate 386 cars.
The shopping complex will feature brand-name products and leading restaurants. Located opposite Central Chidlom department store, it is expected to open in March next year.
This is the fund’s fifth asset in Thailand, he said.
China now looks promising, as property prices have fallen about 20 per cent from their peak, Suchard said. The government there is trying to restrain inflation in residential units while providing financial incentives, such as low mortgage rates for first-time home-buyers.
Demand for homes remains high in China despite some analysts believing that bubbles are forming in high-end residential markets in Shanghai and Beijing.
Some developers in China have run out of money because of the government’s measures to prevent speculation in the real-estate market. This provides a chance to pick up unfinished buildings.
The challenge in Vietnam is the widely fluctuating exchange rate, which could cause foreign investors to lose money, Suchard said.
Early this year, Recap bought Japan Hotel and Resort Inc (JHR), a property fund listed on the Tokyo Stock Exchange that owns nine hotels in Tokyo, Osaka and Okinawa.
It was the second investment after Recap acquired Nippon Hotel Investment Corp last year. Now the fund has 28 hotels in Japan under management with the portfolio worth about US$17 billion (Bt51.8 billion).
The global financial crisis has provided opportunities to invest in developed regions of Asia such as Japan, Singapore and Hong Kong.
The return on assets of Recap ranges from 10-100 per cent. The average is about 20 per cent but investors must hold for the long stretch – five years or more.
Recap will buy only projects where it can control management, Suchard said.
Recap has pension funds in North America, Europe and Asia as its clients, representing a majority stake of investors putting their money into the funds managed by Recap. Since its inception in late 2004, Recap has launched three funds, he said.
