Trust to invest in Bali and KL hotels

Real Estate August 23, 2018 17:40

By The Nation

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After winning unit-holders' approval, Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust (SHREIT) has announced its decision to invest in two hotel properties in Asean.

They are the Sofitel Bali Nusa Dua Beach Resort and Hilton Garden Inn Kuala Lumpur, for which it will borrow US$62.5 million (Bt2.08 billion) and issue up to 415 million shares for subscription by the existing unit-holders (at least 50 per cent) and by the public. 

The deals will raise its asset under management (AUM) to Bt10 billion, it said. Its management expressed confidence in the target properties' great potential, citing growth in the number of domestic and international tourists.

James Lim, executive director of Strategic Property Investors Co Ltd (SPI), an independent professional real estate investment trust (REIT) management firm, said the two target properties have great potential. Bali is an international tourist destination for which Indonesia grants free visas to tourists from 169 countries. 

It posted growth in the number of tourists for the past 10 years at an annualised rate of 14.6 per cent, with the number of tourists reaching 5.5 million in 2017 and expected to jump to 6.5 million this year. 

Kuala Lumpur ranked 10th among the world's most visited cities and, due to its popularity among Chinese, Indian and West Asian tourists, it records constant growth in tourism, with annualised rates for the past 10 years at 4.8 per cent for international tourists and 12.3 per cent for domestic tourists. 

Patan Somburanasin, managing director of SPI, noted that SHREIT will finance the investment cost of around Bt5.8 billion by issuing up to 415 million shares to increase its capital and securing loans of Bt2.08 billion, and that the investments will increase the value of its AUM to Bt10 billion from the current level of around Bt5 billion and will turn it into one of the largest REITs on the Stock Exchange of Thailand.