Thai property developer Bhiraj launches Reit to invest in central Bangkok projects
The US$183 million fund will focus on properties in the Sukhumvit area of the capital
Thai property developer Bhiraj Buri Group has set up a real estate investment trust to raise 6 billion baht (US$183.5 million) for new mixed-use projects on Sukhumvit Road in the capital Bangkok, aiming to make the area a landmark for consumer goods and e-commerce.
Bhiraj Office Leasehold Reit (BOFFICE) will invest in leasehold spaces in Bhiraj Tower at EmQuartier, a grade A office building in Sukhumvit's central business district, and all connected areas for a term of 26 years and nine months.
The inception was filed with the Securities and Exchange Commission on November 9 and is pending approval.
Atthakorn Netneramitdee, managing director at Bhiraj Reit Management, said the building started rental service in March 2015 and as of the end of September had an occupancy rate of 98.7 per cent and total leased space of 49,700 square metres, with more than 8,000 workers.
The tenants comprise small firms and large multinational companies in different industries such as consumer products, e-commerce, pharmaceuticals and automotive. Foreign companies make up 80 per cent of tenants and domestic firms the remainder.
The rental space ranges from 130 to 2,000 square metres and the rental price is 850 baht to 1,200 baht per square metre.
“The largest tenant rents 2,000 square metres and contributes 7 per cent of total rental revenue,” said Atthakorn. The rental price will be revised every three years, in line with the rental contracts, he said.
Atthakorn said the BOFFICE's initial target would be to select long-term leasehold spaces of 94,853 square metres within the Bhiraj Tower at EmQuartier, including office space for rent, parking space, common areas for the offices and spaces for connected utility services.
“The office building along the Asok-Sukhumvit area has become a prime location for commercial, consumer goods, and e-commerce over the past few years as firms have migrated from Silom and Sathon”, said executive director Pitiphatr Buri.
Pitiphatr said the company would also use the funds raised from the Reit to invest in other mixed-use projects in Sukhumvit's central business district, including the Summer Lassale project and a new project that will be launched in the second half of 2018.
The investment would be up to 6.6 billion baht, to be raised by issuing Reit shares worth up to 5.153 billion baht, and securing long-term loans of up to 1.75 billion baht.
Rents for grade A office space in Bangkok’s central business district have increased by 6.5 per cent over the past five years, making the Reit attractive said Sawat Srisaranyapong, head of investment banking at Kasikornbank, citing CBRE research.