Fico bolsters its property arm with hotel buying spree

Economy July 11, 2014 00:00

By Sucheera pinijparakarn
The Na

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FICO CORPORATION aims to acquire up to 20 hotels in the European Union in the next two years after investing 80 million euros (Bt3.5 billion) to buy nine hotels in Germany.

Fico chief executive Krit Srichawla said yesterday that revenue from the company’s hotel portfolio was small and it wanted to strengthen the portfolio, with the acquisition of hotels in Europe the main focus.
The company plans for its hotel portfolio to represent between 10 and 20 per cent of its total revenue in the next few years.
“The supply [of hotels] in Europe is interesting for us and Europe’s interest rates are reasonable,” Krit said. 
“Moreover, Germany is the strongest economy in the EU. Therefore the investment in hotels [there] is value for the group.”
He said buying more hotels would help diversify the company’s revenue and the economic climate in the EU made the move more attractive.
Fico’s many businesses also encompass the garment and restaurant industries. 
Krit said the company preferred buying existing hotels instead of building them because building hotels in Europe was a drawn-out process.
The company yesterday signed a 45-million-euro bridge loan with Krungthai Bank to buy nine hotels in Germany. Those hotels are three- and four-star and have around 100 rooms each.
“We have a leaseback contract with a US company to operate the nine hotels for the group,” Krit said.
He said Fico aimed to reach the break-even point from the investment within 10 years, adding that the company had targeted a return on investment of about 9 per cent per year through the leaseback. 
Kittiphun Anutarasoti, senior executive vice president of Krungthai Bank, said the bridge loan was for two years and after that the bank would help design a long-term financial structure for Fico to support additional acquisitions.
He said that in the first half of the year, KTB exceeded expectations by approving Bt19 billion in corporate loans. Brighter economic sentiment in the current second half, after the expected implementation of a fully functioning government, means its corporate-loan growth is likely to exceed the targeted 6 per cent this year.
KTB is targeting Bt35 billion in new corporate loans and Bt620 billion in outstanding loans this year.