Major industrial estate developer launches REIT
Thailand’s leading industrial real estate developer, Amata Group, recently launched its first Real Estate Investment Trust (REIT), called Amata Summit Growth REIT.
The REIT will put its funds into 30-year leaseholds of factories in existing Amata Group industrial estates.
Amata Summit Growth REIT will be invested into an area of 160,000 square metres with a book value of 4.75 billion baht and includes 88 factories which have an occupancy rate at present of close to 97 percent. According to Amata Group the number of rental factories has been expanding by about 20 percent per annum.
Most of the factory customers consist of automotive, plastics and chemical industries. Contracts are usually on a three-year basis and rental fees tend to rise at rates of three to four percent annually.
Amata Group said it has plans to double the trust size over the next two or three years simply by transferring more of its land in industrial estates into the REIT.
The trust plans to pay a dividend representing at least 90 percent of its net profit, with the yield being not less than 8.7 percent.
A spokesman for Amata Group said the company will also consider acquiring other types of assets such as shopping malls, accommodation, condominiums and commercial buildings.
REIT’s are becoming more and more active in the Thai marketplace although the Amata Group REIT is likely to be the first concentrating primarily on the industrial sector.
REIT’s only became part of the real estate marketplace at the start of 2013, with REIT Regulations taking effect as of the beginning of January that year. The Securities and Exchange Commission of Thailand (SEC) had approved the establishment of a regulatory framework in October 2010, but REIT’s did not really start entering the general marketplace until 2013. The aim of REIT’s was to ‘enable property developers to employ a new fundraising vehicle while providing public investors with an alternative investment product.’
REIT’s have basically supplanted Property Funds for Public Offering (PFPO). the previous method of raising capital for real estate developments.
The move to institute REIT’s in Thailand came at a time when international real-estate investors were no longer looking favourably on the Thai model. With the REIT model now in place, flexibility has been added to the regulatory mix, and should encourage foreign investors.
CIMB Thai, one of the biggest companies in Thailand, announced in March that it planned on launching two REIT’s in 2015. The first will be centred around office space while the second will be ‘a combination of two or three hotels.’