Bangkok- Singha Estate Public Company Limited (S) announced that the company’s board of directors on 7 January 2022 had a resolution to approve a long-term lease agreement of three premium office buildings and retail space with S Prime Growth Leasehold Real Estate Investment Trust (SPRIME). The lease agreement is valued no less than 6.45 billion baht. The three assets include (1) Singha Complex; (2) Metropolis Building; and (3) retail plaza at Suntowers, which will have total usable space of over 130,000 square meters and rental space of over 64,000 sq m. The board also approved Singha Estate to subscribe 15% of total SPRIME’s new trust unit issuance at the maximum amount of no more than 3,701.59 million baht.
Ms. Thitima Rungkwansiriroj, Chief Executive Officer of Singha Estate Plc (S), said the prime location, a balance of customer portfolio management, asset improvement, and the offering of new business models to cope with tenants’ changing demand are factors driving the occupancy rates at Singha Complex, Metropolis Building, and Suntowers’ retail plaza to as high as 94.4%, 82.7% and 96.5%, respectively.
The transfer of three leasehold assets into SPRIME is the REIT’s second investment after Singha Estate was successful to lease office space at Suntowers for a long term to SPRIME in early 2019. This follows the company’s asset portfolio management strategy, which will focus on capital recycling to strengthen its financial positioning and to support consistent business expansion in the future.
The focus lies on the company’s current business extension in office building, the penetration into single detached house sector which has high demand, and the construction of industrial estate for manufacturing relocations, which want to seek lower operation costs amidst fierce market competition. Besides, Singha Estate is also seeking investment opportunities in new businesses to build recurring incomes and generate stable returns to shareholders. Thus, the company will make additional investment in newly issued trust units to maintain the unitholding in SPRIME.
Mr. Ketkorn Kematorn, Managing Director of SREIT Management Company (SREIT) as SPRIME manager, said the assets SPRIME invests this time were of high quality, given their prime locations, travel convenience with proximity to mass-transit lines. More importantly, they have distance from central business districts (CBDs), which are expected to see fierce competition as construction of large-sized buildings will be likely completed in the next few years. Besides, the current occupancy rates of the three buildings are quite high, prompting an increase in average occupancy rate after SPRIME has Suntowers as its only asset.
As the SPRIME manager, SREIT expects the long-term lease of three assets will not only raise SPRIME’s incomes more than 1.5 times, but also diversify portfolio risks via a variety of locations, building types and tenant groups. These assets include (1) Singha Complex at Asoke-Petchaburi Intersection for 30 years with SREIT’s confidence of this asset as SPRIME’s flagship asset in the future; (2) Metropolis Building on Sukhumvit Road, close to EmQuartier Shopping Mall, for 23 years and 27 days; and (3) retail plaza at Suntowers on Vibhavadi-Rangsit Road, close to Lat Phrao Intersection for 26 years, six months and 17 days. In addition, SPRIME will call for its capital increase for the first time after its establishment and listing on the Stock Exchange of Thailand in early 2019. This will make the REIT to have a larger trust fund size and increase SPRIME’s liquidity in the secondary market.
On 7 January 2022, SREIT’s board meeting resolved to present SPRIME’s unit holders to approve investment in the three assets with the investment amount of no more than 7,283 million baht. This investment will be financed by a capital increase via an issuance and offer of no more than 663,000,000 units, and borrowings from commercial banks and/or financial institutions. The Extraordinary general meeting of the unit holders is scheduled at 13:30 hours of Tuesday 15 February 2022. This meeting will be held via electronics means.