SINGHA ESTATE PLC, a property arm of Singha Group, will invest more than Bt55 billion between now and 2020 on the development of residential projects for sale and on commercial buildings such as hotels, offices, industrial estates and warehouses, chief executive officer Naris Cheyklin said.
The commitment forms part of the company’s overall investment budget of Bt100 billion from 2015 to 2020.
“We spent Bt50 billion of our investment budget from 2015 until the end of August this year on projects such as the takeover of a hospitality business in the UK, investment to develop residential projects in the Maldives, the acquisition of the Sun Tower office building in Bangkok, and investment in a new residential project, the Esse Sukhumvit 36,” he said. “This will generate income to our business over 2018-2020.”
Of the Bt55 billion investment budget just announced, half would be spent on the company’s hotel business in Thailand and overseas as part of a focus on Asia-Pacific countries that has a target return on investment of over 7 per cent a year. The next 20 per cent would be allocated to office buildings, and the next 30 per cent would be used to develop residential projects in Thailand, the company said.
As part of these plans, Bt4.93 billion will be spent to develop Santiburi the Residences in Bangkok in the last quarter of this year. The company also plans to develop new office space in Vibhavadi Road and in others location in Bangkok to boost its office holdings from 60,000 square metres now to 200,000 square metres in 2020.
The company also plans to look into merger and acquisition opportunities for four-star hotels in the domestic and Asian markets, Naris said.
“Our investment of Bt55 billion will focus on residential, hotel and office, as we also have a budget over than Bt55 billion to invest in new businesses that relate to the property market, such as warehouses, industrial estates and others. But we cannot say by how much that will be over Bt55 billion, as that depends on the business opportunity at the time,” he said.
The investment funds will come from the company’s initial cash, boosted by the delivery of residential projects to its customers over the rest of this year and into next year. The company has issued convertible debentures worth Bt7.72 billion, and increased its capital and sales under private placement to Bt1.66 billion for the first half of this year.
The company plans to issue real estate investment trust (REIT) units worth between Bt6 billion and Bt15 billion from 2019-2020. Office building such as Singha Complex and Sun Tower, as well as some of the company’s hotels, may be sold to the REIT. This would support its aggressive investment plan till 2020.
Under the investment plan, the company targets its total revenue to reach Bt20 billion in 2020, with half to come from the sale of residential projects, Naris said, with the remainder from recurring income such as that generated by its office and hospitality businesses.
In the first half of this year, the company reported total revenue of Bt2.38 billion and a net loss of Bt28.02 million.
Naris said company’s investment plan factored in Thai economic growth of up to 4 per cent a year and the absence of any business risks.
However, if economic growth falls short of that mark and a business risk emerges over the next three years, the company should still sustain business growth while maintaining its debt-to-equity ratio at no more than 1:1, Naris said. At present, the company has a debt-to-equity ratio 0.4:1.