Strong feedback to TPRIME REIT’s SET debut

TPRIME REIT opened at Bt14, up from its initial-public-offering price of Bt10. It closed down at Bt12.70, a 27 per cent increase from its IPO price, on a total trading value of Bt1.05 billion.
Suchad Chiaranussati, a director of SCCP REIT, the manager of TRPIME REIT, said the company was planning to add two properties with occupancy rates of more than 90 per cent in the central business district (CBD) to strengthen the growth of the new trust. He added that TPRIME REIT should be valued at more than Bt10 billion, in line with the existing funds now being traded on the SET.
The two new properties are expected to be added next year. 
If the company does not see any more potential in Thai CBDs, the REIT manager will consider buying properties overseas, as SCCP has expertise in investing in foreign properties.
TPRIME REIT raised funds from selling 547.50 million units at Bt10, totalling Bt5.475 billion, subscribed from October 4-7, to invest in leasehold rights over the Mercury Tower and freehold rights to Exchange Tower, with total asset value of Bt7.2 billion.

Occupancy rates at over 97% 
Both buildings have occupancy rates of more than 97 per cent, and their locations in the CBD near mass-transit routes means they will be able to increase rental fees gradually. Hence TPRIME REIT will be able to generate a healthy rate of return for its investors, Suchad said, expected to be around 6-8 per cent per annum from the Exchange Tower freehold.
Rents at the two buildings are Bt800-Bt900 per square metre, adjustable by 15 per cent at every contract renewal. The contract term is three years.
“The supply in prime areas of Bangkok is limited, meaning the outlook for raising rental fees is positive,” he said.
Sittichai Mahaguna, head of investment banking business at Kasikornbank, the sole underwriter of TPRIME REIT, said several companies were looking at issuing REITs to raise funds because investors view such trusts positively. Their stable returns make REITs attractive for investors looking for high yield.
In Thailand, REIT assets are still mainly office buildings, warehouses, hotels and retail outlets, while overseas, healthcare and educational properties can be investment assets. The reason for this discrepancy is that in Thailand, the owners of healthcare and educational businesses have sufficient cash flows.
KBank this year has three REIT deals. Golden Ventures Leasehold Real Estate Investment Trust (GVREIT) began trading on April 4, TPRIME is the second, and WHA REIT will begin trading at the end of the year.