Singha Estate readies Bt85 bn spree
LISTED property firm Singha Estate Plc plans to spend as much as Bt85 billion from 2019 to 2023 under an ambitious investment target aimed at pushing annual revenue growth into the double digits for the period, chief executive officer Naris Cheyklin said yesterday.
Up to Bt20 billion of the earmarked funds will be spent in 2019, with spending for the following years in the targeted period averaging at Bt15 billion a year.
The investment funds will come from the company's revenue, initial cash flows, the issuance of debentures, and the issuance of a real estate investment trust, Naris said at a press conference.
On Monday, the company announced plans to launch the S Prime Growth Leasehold Real Estate Investment Trust (SPRIME) as a funding vehicle with an initial investment in 30-year leasehold rights in the Sun Towers office complex on Vibhavadi-Rangsit Road. As of August 30, the Sun Towers office had an occupancy ratio of 95.1 per cent. The company has submitted a draft prospectus for review by the Securities and Exchange Commission (SEC) and the initial offering process for the real estate invest trust (REIT) is pending the regulator’s approval.
Naris declined to disclose the proposed value of the REIT issue, as this would be announced next week.
However, the company reported to the Stock Exchange of Thailand on November 13 that the company would issue a REIT worth no more than Bt5.71 billion. The initiative forms part of the company’s business plan announced in March for the issuance of a REIT to be valued at up to Bt20 billion from 2019 to 2020.
For the company’s investment plan for 2019, the company aims to launch one condominium worth about Bt4 billion and one mixed-used project that incorporates offices and retail space on Vibhavadi-Rangsit road, near the Sun Tower office complex, worth Bt4 billion.
A further Bt5 billion will spent to acquire land for the development of residential projects from 2020 to 2023. Some Bt7 billion will spend on mergers and acquisitions involving assets in both the domestic and overseas markets, covering sectors such as hospitality, offices and retail.
"For our mergers and acquisitions business, we expect a yield of about 8 per cent a year and a return on investment averaging 14 per cent a year. It will take about eight years to pay back all of our investment," Naris said.
However, he declined to give more details on the kinds of businesses that the company was keen on investing in. He indicated its new businesses would be related to property and would not be overly dependent on business opportunities and a return of investment back to the company. Still, Naris said the new businesses had to generate recurring income to the group and that would boost its recurring income to 50 per cent of the group revenue in 2021.
Under the aggressive investment for 2019, the company expects its total revenue to achieve Bt20 billion, with up to 60 per cent of the total coming from sales at its residential projects. The remainder will come from recurring income from the company’s holdings of offices and hotels in Thailand and overseas, Naris said.
He added up to 20 per cent of its total revenue in 2019 will come from the company’s overseas businesses.
The company expects its overseas revenue will grow to account for 30 per cent of its total revenue in 2023, in line with the business target for it to become a global holding company in 2023, Naris said.
In the first nine months of this year, the company reported total revenue of Bt3.89 billion, up 18 per cent from the same period of last year. It had a net profit of Bt981 million, in contrast from its net loss of Bt82 million in the same period of last year.
For 2020 to 2023, the company plans to launch at lease one condominium and one mixed-use project a year and will continue to pursue mergers and acquisitions of new businesses to drive its business towards sustainable growth each year, Naris said.
"Our business strategy is to be a global holding company firm and also to be a member of the Dow Jones Sustainable Index in 2023,” he said. “That means we have to drive our annual business growth into the double digits by aggressive investments in both the domestic and overseas markets. This is backed by our strong confidence in the growth of the country's economy and the global economy that will support our business growth.”
At present, Singha Estate develops condominiums under the Esse brand and has two office buildings in Thailand, along with 37 hotels with a combined 4,000 rooms in Thailand, Europe, the Maldives and Fiji.
