Fitch Places Thailand's TREIT on Rating Watch Positive Upon Planned Merger
Fitch Ratings (Thailand) Limited has placed TICON Freehold and Leasehold Real Estate Investment Trust's (TREIT) 'A-(tha)' National Long-Term Rating and national senior unsecured rating on Rating Watch Positive (RWP).
This follows an announcement by TICON Industrial Connection Public Company Limited (TICON) that it will merge its group-sponsored property funds - TICON Property Fund, TPARK Logistics Property Fund and TICON Industrial Growth Leasehold Property Fund - under TREIT.
The property funds' assets and liabilities will be exchanged via issuance of TREIT trust units and cash payments, which will be financed by debt.
The RWP reflects Fitch's expectation that the merger will transformatively increase TREIT's scale - by more than four times - and lead to greater tenant diversification.
However, Fitch does not expect a significant change in TREIT's financial profile, as the company aims to maintain its gross debt/total assets at about 30%.
The RWP should be resolved upon transaction approval by the unitholders of all related property funds and REITs, including the asset and liability transfers, within the designated timeframe; that is, by 31 December 2017.
This timeframe may be extended along with any extension of government-granted conversion-related tax and fee incentives, which could cause the RWP resolution take longer than the typical six-month period.
