GROREIT prepares Royal Orchid sale after ROH buy-back lapse

Grande Royal Orchid Hospitality Real Estate Investment Trust with Buy-Back Condition, or GROREIT, is preparing to revalue and sell the Royal Orchid Sheraton property after Royal Orchid Hotel (Thailand) Public Company Limited failed to complete a 4.873-billion-baht contractual buy-back by July 14, 2026.

ONE Asset Management Limited, the trust manager, and MFC Asset Management Public Company Limited, the trustee, have instructed ROH to return the hotel property within 30 days. The deadline falls in mid-August, after which the trust has warned that it may pursue legal remedies to protect unitholders’ interests.

Starwood, the hotel operator under Marriott International’s Sheraton brand, has been assigned to continue managing the property during the transition. Once control has been returned to the trust, GROREIT plans to commission a new valuation and seek the approvals required for a competitive sale.

Buy-back right ends after July 14 deadline

GROREIT acquired the Royal Orchid Sheraton Hotel & Towers property from ROH in 2021 for 4.5 billion baht. ROH then leased the hotel back from the trust and was required to repurchase it at the end of the fifth lease year.

The agreed buy-back price was 4.873 billion baht, excluding value-added tax. It was calculated according to the internal rate of return that the trust was intended to deliver to its unitholders, rather than being set solely by the property’s prevailing market value. A previous appraisal placed the hotel’s value at 5.2 billion baht.

ONE Asset Management and MFC maintain that ROH did not present a cashier’s cheque or make any payment at the relevant land office on July 14. They therefore regard ROH’s contractual repurchase right and its right to manage the property as having expired.

ROH has disputed that account, arguing that the payment method proposed for the transaction did not comply with the original agreement.

In response, the trust manager and trustee stated that splitting the payment between the Government Savings Bank, as mortgage creditor, and GROREIT had been discussed at the request of ROH’s prospective financier. MFC subsequently notified ROH that it could instead pay the entire amount directly to the trust, but no payment was presented by the deadline.

Starwood keeps hotel operating during transition

Alongkorn Prathanrasnikorn, chief property and trust officer at ONE Asset Management, maintained that the unsuccessful buy-back reflected ROH’s financing arrangements rather than the operating performance of the hotel.

ONE Asset Management reported that the hotel had generated net profit of 323 million baht and maintained an average occupancy rate of between 72% and 77%.

Starwood will manage the hotel directly on behalf of the trust to prevent disruption to guests, customers, employees and business partners while the property is transferred back to GROREIT.

After completing the handover, GROREIT expects an independent appraisal to value the property at about 4.8 billion to 5.2 billion baht.

Eight prospective investors from Thailand and overseas have already expressed interest. ROH would also be able to participate, but it would have to compete on the same terms as other bidders rather than exercise its former right to repurchase the property at the contractual price.

The trust expects the handover, approval and sale process to be completed within 2026. Any sale would require the relevant procedures and approval from GROREIT unitholders.

Bank debt takes priority over unitholder payments

The Government Savings Bank is GROREIT’s first-ranking creditor because the Royal Orchid Sheraton property is mortgaged to the bank.

The trust has 1.35 billion baht in outstanding bank debt. Interest is charged at the minimum lending rate minus 1.6 percentage points, equivalent to slightly more than 4%, producing annual interest costs of about 60 million to 70 million baht.

Following the missed buy-back, MFC notified the bank that GROREIT was seeking an extension of the repayment period, together with waivers and consent relating to the terms of the loan agreement.

Proceeds from any sale of the hotel would first be used to repay the Government Savings Bank and cover transaction expenses. The remaining amount would then be distributed to GROREIT unitholders.

If the property is sold for at least 4.873 billion baht, the trust manager estimates that unitholders could receive about 11 baht per unit, compared with the original unit price of 10 baht. Including returns already distributed by the trust, the overall return has been estimated at about 8% a year.

GROREIT also prepared contingency measures when the trust was established five years ago. These include a reserve equivalent to 3% to support interim payments to unitholders while the property is being sold.

Unitholders normally receive returns of about 6% a year, meaning the reserve could support payments for approximately six months during the asset-management and sale process.

The trust has also considered a broader contingency valuation of between 4 billion and 5 billion baht. ONE Asset Management has expressed confidence that a sale above 3 billion baht would protect unitholders from a loss of principal.

ROH reports five consecutive periods of losses

ROH’s financial statements show consecutive net losses from 2022 through the first quarter of 2026:

• 2022: 123.01 million baht
• 2023: 47.74 million baht
• 2024: 30.06 million baht
• 2025: 957.72 million baht
• First quarter of 2026: 269.67 million baht

The company’s shareholders’ equity had fallen to 1.771 billion baht, while total liabilities had risen to 6.360 billion baht. The 4.873-billion-baht repurchase price was about 2.7 times ROH’s equity.

Grande Asset Hotels and Property Public Company Limited, or GRAND, held a 97% stake in ROH as of June 12, 2026.

ROH shares remain suspended from trading and carry SP and NC signs. The Stock Exchange of Thailand imposed the NC sign after the company failed to meet free-float requirements and its shares had remained suspended for more than a year.

GRAND’s equity falls as losses accumulate

GRAND has also reported consecutive net losses:

• 2022: 946.22 million baht
• 2023: 753.01 million baht
• 2024: 673.28 million baht
• 2025: 1.543 billion baht
• First quarter of 2026: 230.15 million baht

The parent company’s shareholders’ equity declined from 3.805 billion baht in 2021 to 398.47 million baht at the end of the first quarter of 2026.

GRAND’s total liabilities stood at 11.555 billion baht, leaving its equity at a low level relative to the size of its assets and outstanding obligations.

Sources: Bangkokbiznews, SET