Pace Development plans to inject Bt1.5 billion of capital next year into its three MahaNakhon subsidiaries to strengthen the company's finances and decrease debt.
"We want to reduce loans from Bt7 billion to only Bt5.5 billion, so we have to inject cash into our firms," chief executive officer Sorapoj Techakraisri told a press conference yesterday.
The three units are Pace Project I, which is developing a 150room boutique hotel; Pace Project II, which is developing a 200unit luxury residential project; and Pace Project III, which is developing retail space. All of them are part of the MahaNakhon project on Sathorn Road.
The company has to increase capital because it wants to speed up construction from the second half of this year to next year after a delay due to the country's political problems in the first half of this year, he said.
The company may both increase its registered capital and ask for a loan from its board to mobilise Bt1.5 billion, which would raise its investŽment budget from Bt2.5 billion, which it spent from last year until now, to Bt4 billion next year.
The MahaNakhon project has used up Bt2.5 billion of the total investment budget of Bt10 billion, with Bt800 million from the bank loan and the rest from the compaŽny's capital. Kasikornbank is the lead loan provider for this project.
The political turmoil also cramped its sales for MahaNakhon, which dropped from its forecast made in the first half of this year. The company has had to adjust its presales target from 40 per cent to only 30 per cent for this year, after preselling 50 units or about 25 per cent of the total of 200 units.
The company's financial costs have also shot up about Bt150 million above budget, because of interest payments during the delay.
"We see demand for luxury resiŽdences recovering, as shown from our sales of 10 units worth Bt600 million within six weeks after the political problems ended," Sorapoj said.
Up to 70 per cent of its customers now are local investors, who were waiting to buy a residence since the political crisis broke out, while only 30 per cent are foreign investors.
The company had earlier expected that half of the buyers of MahaNakhon units would be foreigners.
Foreign investors still have concerns about the political situation in Thailand so they delayed their decision to buy, Sorapoj said.
However, the company believes that foreign buyers and investors will return to the market from now until next year after two of the 10 units sold since last month went to foreigners.
The company is spending Bt5 million to showcase its two projects - Saladaeng Residences and MahaNakhon - under the theme "Discover PACE" at Siam Paragon from now until Tuesday. The event offers a special package to customers that includes a down payment reduced from 30 per cent to 10 per cent.
The next 20 per cent will be paid in eight months when the Saladaeng Residences project is completed. This project has sold 60 per cent of its total value of Bt2.5 billion.
The MahaNakhon project also offers a special price for customers booking at this event.
The company expects sales of at lease Bt550 million from this event - Bt350 million from the MahaNakhon project and Bt200 million from Saladaeng Residences.
Pace is now developing only these two projects.
To develop the MahaNakhon project, it has set up a joint venture with Israel's largest realestate developer, Industrial Buildings Corp, a subsidiary of the Fishman Group.
The group expects presales of Bt2 billion from both projects this year.