SPRIMEs IPO First Day Trade Expects approximate yields of 7% for the first year, Confident over Suntowers Office Building and its prime location to connect businesses and growth

Stocks and Financial Services Press Releases Wednesday January 23, 2019 10:53
Bangkok--23 Jan--MT Multimedia

SPRIME's units are listed on the Stock Exchange of Thailand on the first day trade, expecting approximate yields of 7% for the first year (January 1 – December 31, 2019) to the unitholders. With confidence over the potential of the investment asset, Suntowers Office Building and the location of connecting businesses, mass transportation system, retail stores, and leading condominium projects, as well as renters from different businesses will support the REIT's growth.

Mr. Ketkorn Kematorn, Managing Director of S REIT Management Company Limited, as REIT manager, disclosed that S Prime Growth Leasehold Real Estate Investment Trust (SPRIME), the first REIT of Singha Estate Public Company Limited, the leading property development in Thailand, had issued the REIT's IPO on the first day trade (January 23, 2019) on the Stock Exchange of Thailand after the closure of the REIT's subscription at the highest price as targeted with great responses from the institutional and individual investors, indicating the 5-time oversubscription of the actual unit allocation.

The strength of the 30-year leasehold rights of Suntowers Office Building is the improved beautiful modern building with well-care building system, located near Lat Phrao Intersection connecting businesses, mass transportation system, retail stores, and leading residential condominium projects. The location is not far from Mo Chit BTS skytrain station, Phahon Yothin MRT station. It's near Chaloem Mahanakhon Expressway (Din Daeng Toll Plaza), Don Muang Toll Way, and other important places such as Mo Chit Bus Station, Chatuchak Park, Central Plaza Lat Phrao Mall, and Bang Sue Central Station construction project which is the central station of potential large trains and the railway transportation hub of ASEAN. In addition, it is closed to Sun Plaza Building of Max Future, the large retail area and food center.

"We are confident that the investment asset can generate good earnings with the expectation of approximate yields of 7% provided to the unitholders of the REIT in the first year (January 1 -31 December, 2019) of which the rate is high in comparison with other REITs investing leasehold rights of office building", said Mr. Katekorn.

Mr. Naris Cheyklin, Chief Executive Officer of Singha Estate Public Company Limited, the leading property development and investment in Thailand said that the listing of SPRIME on the Stock Exchange of Thailand is the Company's pride with confidence of Suntowers building's potential and strength of location and convenient transportation which is near mass transportation system and other facilitations, as well as its efficient building management which provides long-term satisfied growth to the building and SPRIME.

It is expected that the overview of rental office building business in Bangkok area continues to grow with the economic expansion and Thailand's being the hub of ASEAN region. In 2018-2019, the office building market in Bangkok area is growing well with high rental capacity which is reflected by the total occupancy ratio as of ending Q1/2018 at 92.7% or accounting for more than 8.09 million square meters from the total office building's rental areas of more than 8.78 million square meters.

Mr. Rawin Boonyanusasna, Senior Executive Vice President Group Head, Global Markets Group, Krungthai Bank Public Company Limited, as financial advisor and lead underwriter disclosed that the Suntowers Office Building that SPRIME has invested was the quality asset with outstanding location and good operating results. The rental prices of the office areas and services in 2015 – 2018 showed the average growth of almost 7% per year and as of September 30, 2018, the average rental price of the office areas and services was at 572 baht per square meter per month.

Meanwhile, the occupancy rate of the office building in 2015 – 2018, and as of September 30, 2018 was constantly more than 93% with the 61 renters in total from different businesses. The differences of the renters' businesses prove to be a good risk management and most of the companies are leading local and oversea companies. The rental contracts which are expired in 2019 will be gradually renewed as planned.

The management of the investment asset after the establishment of the REIT will be operated by Max Future Co., Ltd., a subsidiary of Singha Estate Pcl., which has the Suntower Office Building management experience prior to the investment of the REIT. Mas Future will manage the asset that the REIT invests for the first time. This will help continue the REIT's management of the asset. Thus, the good experience and management will benefit the REIT's operating results in the future.

SPRIME's total investment of 5,717.5 million baht comes from the loan of 1,250 million baht and the offering of the investment units of 446.75 million units, worth totaling 4,467.5 million baht to invest in the 30-year leasehold rights on part of the land, office space, conference space, fitness, common areas, parking areas, and the Suntowers Office Building operation system.. The investment is also made on the property ownership relating with the operation of Suntower Office Building on the location of Lat Phrao Intersection from Max Future Co., Ltd, a subsidiary of Singha Estate Pcl., which consists of the 32-storey A Building, 40-storey B Building, and 1-storey basement where the building foundation is connected. They are located on a more than 5-rai land with the total utilized area of investment asset of around 118,828 square meters of which 62,850 square meters are the office space and 944 square meters are conference space.

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