Distressed assets attract cash-rich Univentures

"We believe that this is a good time to buy property projects both distressed assets and undeveloped land when their prices show signs of maintaining or dropping between 10 and 20 per cent," CEO Ornruedi Na Ranong told a press conference yesterday.

The plan is expected to help boost total revenue by 8-25 per cent to Bt1.3 billion-Bt1.5 billion this year.

Half of the investment budget will come from internal cash flow and half from bank borrowing.

Nearly half of the budget - Bt2 billion - will be spent on two or three residential projects to be developed by Grand Unity Development, a joint venture of Univentures with 60 per cent, LPN Development with 20 per cent and the Yoawawong family with 20 per cent.

The remaining Bt2.5 billion will finance two or three projects that might be in the hospitality business, such as hotels and serviced apartments, or office buildings and residences.

The company has strong interest to buy stalled properties, those on which construction has started but its owners face financial problems till they have to delay their investment and are ready to sell out.

Uncompleted projects take less time to develop than launching new projects. This will speed up sales to meet the target for this year.

The company estimates Bt10 billion worth of distressed assets in the market, given that non-performing loans from property projects amount to Bt40 billion out of the total NPLs of Bt300 billion. The non-performing assets include hotels and resorts and office buildings, she said.

Up to Bt500 million of Univentures' total revenue target this year will come from its zinc business, which now runs at only 70 per cent of total capacity of 12,000 tonnes a year.

The remaining revenue target will be divided into Bt300 million from its 49-per-cent-owned subsidiary Prinventures, Bt500 million from Grand Unity Development and Bt200 million from new projects that it will take over this year.

This will drive its total revenue to meet the higher target of Bt1.5 billion, she added.

Univentures earned Bt61.8 million on revenues of Bt1.2 billion last year, dropping 38 per cent and 20 per cent respectively from 2007.