Property Perfect offers 2 options in bid for major stake in Krungthep Land
June 18, 2014 00:00
By Somluck Srimalee
Property Perfect is negotiating with beverage tycoon Charoen Sirivadhanabhakdi for a major stake in Krungthep Land, and with a Japanese investor on joint development of a ski resort in Japan, after acquiring a major stake in Thai Property.
"We will offer two options for acquiring a major stake in Krungthep Land," Property Perfect president and chief executive officer Chainid Adhyanasakul said.
He said that if the company bought a 40-per-cent stake in Krungthep Land from Charoen’s Fraser and Neave, it would cost more than Bt2 billion, or it might use others ways to be the majority shareholder. Meanwhile, the company will get cash at less Bt1 billion if the company decided to sale 20 per cent stake in Krungthep Land Plc.
"This deal will be finalised by the end of this year," he said.
Meanwhile, Property Perfect is negotiating with a Japanese investor for joint development of a hotel and resort in Hokkaido. It is also negotiating with a US firm to manage its Kiroro ski resort in Japan. Both deals are expected to be finalised this year.
"We want to set up our business strategy to be an integrated property firm that both develops residential projects, which will generate 70 per cent of our total revenue, and owns a hotel, office, and retail business, which will generate rental income, averaging 30 per cent of the total for the long term," he said.
On Monday, the company’s board of directors approved taking over 100 per cent or 3,193,185,471 shares at Bt0.57 per share of Thai Property by way of a swap with Property Perfect’s new shares, with the ratio of 1 Thai Property share and 0.50 share of Property Perfect.
Thai Property owns two office buildings, One Pacific Place and Two Pacific Place, on Sukhumvit Road in Bangkok. The company and its subsidiary Metro Premier Holding Co hold a 40-per-cent stake in Grand Asset Hotel and Property.
Under the deal, Property Perfect will get the right to hold a 40-per-cent stake in Grand Asset Hotel and Property, which owns four hotels in Bangkok, Hua Hin, and Pran Buri district in Prachuap Khiri Khan province and is developing two condominium projects under the Hyde brand.
Once Property Perfect has completed the share swap with Thai Property, it might do a similar swap with Grand Asset Hotel and Property at the ratio of 1 Grand Asset share to 1.149123 Property Perfect shares. If all of the shareholders in both firms prefer cash to shares, the company is willing to pay Bt0.57 per Thai Property share, and Bt1.31 Grand Asset share. That would cost a total of Bt3.9 billion in cash.
"We have a credit facility with a bank for this deal," he said.
Property Perfect plans to issue a real estate investment trust worth Bt5.5 billion, selling hotels, office buildings and resorts to the REIT next year.
Meanwhile, the company has sold undeveloped land in Bang Na and Chaeng Wattana and on Krungthep Kretha Road, worth Bt3.07 billion, and Uniloft Chiang Mai dormitory worth Bt500 million, to its property fund this year. These sales will be booked as revenue this year.
"All of this will help make our financial results healthy and boost our net profit margin from less than 10 per cent to 12 per cent over the next two years. We also target annual revenue growth of less than 20 per cent beginning this year," he said.