Property Funds for Public Offering

Transcription

1 A Brief Analysis of Property Funds for Public Offering in Thailand January 2006 Contents Page What is a PFPO? 2 Definitions and Basis of Calculations used in this Analysis 3 - Bangkok Commercial Property Fund (BKKCP) 4 - CPN Retail Property Fund (CPNRF) 6 - Millionaire Property Fund (MIPF) 8 - MFC-Nichada Thani Property Fund (MNIT) 10 - Baan Sansiri Property Fund (SIRIPF) 12 - TICON Property Fund (TFUND) 13 - Thai Industrial Fund 1 (TIF1) 15 - UOB Apartment Fund 1 (UOBAPF) 17 Summary 19

2 What is a PFPO? A Property Fund for Public Offering (PFPO) is a property fund publicly listed on the Stock Exchange of Thailand (SET). With certain tax advantages, it is similar to a Real Estate Investment Trust (REIT) in other markets. However, as its regulatory framework was established as a recovery vehicle for distressed property assets as a result of the 1997 crash, the PFPO is less flexible than most overseas REIT regulations, which envisioned REIT s as a mainstream investment vehicle. The shortcomings of the Thai PFPO regulations are principally that no debt is allowed within the fund, and that the units, on the initial launch of the fund, must be distributed on a small lots first basis, which hampers its acquisition by institutions the investor group to which PFPO s is most likely to appeal. The key features of a PFPO are: The units are listed on the SET under the supervision of the SET and Securities and Exchange Commission (SEC) under which it is regulated, much as any other security. Unlike other equities in Thailand, there are no limitations to foreign ownership. The Fund must be managed by managers licenced by the SEC, which effectively means mutual fund managers. The Fund Managers may then appoint Property Managers and/or Asset Managers to manage the properties on a day-to-day basis. This procedure differs from most REIT regulations, where an operator acts as both Fund Manager and Property Manager. 75% of the fund must be invested in property, and there are restrictions on the how the remaining 25% can be invested. Property acquired by the fund must be at least 80% developed. At least 90% of the net income must be distributed in dividends. The funds themselves are free from income and capital gains taxes. Special tax procedures apply to dividend distribution in Thailand: listed companies pay no tax, unlisted companies pay half their usual tax, and individuals are subject to a 10% Withholding Tax, all subject to certain conditions. Qualifying unit holders may elect to have their dividends paid gross. 2

3 Definitions and Basis of Calculations used in this Analysis Fund Size The Fund Size is calculated from the last declared Net Asset Value. Net Asset Valuation (NAV) The NAV s quoted for the various funds are those posted as at the end of each month by the respective Fund Managers. The NAV s used in this analysis are those at 30 th November 20, other than for BKKCP where the NAV figure at 30 th October has been used, as the November figure had not been announced by the year end. Current Price per Unit The Current Price per Unit used is the closing market price on 30 th December 20. Yields Yields are calculated with reference to the distributed dividends over the accounting period from which they were derived. Par Yields are calculated on a par of Baht per unit: Current Price Yields are calculated on the closing market prices of the units on 30 th December 20. Total Returns Total Returns are calculated as the sum of dividends paid during the year and the increase in the market price of units between 30 th December 20 and 30 th December For those funds which are less than a year old, the Total Returns figures have been annualized, using the par value/issue price of 10 Baht as the base. Daily Trading Volume This is calculated on the basis of average daily trading volumes during the month of November 20. Total average daily trading volumes for all 8 funds was 12.4 million Baht (272 million Baht for the month), of which trading in CPNRF represented 89% of the total. 3

4 Fund Name: Bangkok Commercial Property Fund Symbol: BKKCP Date Established: 24/10/2003 Fund Type: Office Property Details Initial investments comprise office and commercial strata title units in two office buildings, Charn Issara Tower on Rama IV Road, Bangrak, Bangkok, and Charn Issara Tower 2, on New Petchburi Road, Bangkapi, Bangkok. The Charn Issara Tower investments are 25 units, totaling 6, sq m (30.63% of the net space in the building) and the Charn Issara Tower 2 investments are 109 units, totaling 22,468.6 sq m (38.36% of the net space in the building), both acquired by the fund from Charn Issara Development Public Company Limited for 245 million Baht and 711 million Baht, respectively. Fund Managers: One Asset Management Limited Property Managers: Charn Issara Development Public Company Limited Trustee: Siam City Bank Public Company Limited Auditors: KPMG Audit (Thailand) Company Limited Fund Size (by NAV): 1,144 million Baht NAV per Unit (31/10/): Baht Current (30/12/) Price per Unit: 9.00 Baht Average Daily Trading Volume (November 20): 116,460 Baht (13,064 units) BKKCP - NAV & Market Price Baht NAV Price Nov-03 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan- Mar- May- Jul- Sep- Nov- Dividends to Date: Payment Accounting Baht per Baht per Unit Date Period Unit for Year 27//04 24/10/03 31/03/ /08/04 01/04/04 30/06/ /11/04 01/07/04 30/09/ /03/ 01/10/04 31/12/ // 01/01/ 31/03/ /08/ 01/04/ 30/06/ /12/ 01/07/ 30/09/

5 Yield on Par Value (10 Baht) Per Annum: Yield on Current Price Per Annum To Date: 4.97% To Date: 5.52% 20: 7.33% 20: 8.15% Last Period: 5.20% Last Period: 5.78% Total Returns (Per Annum): To Date: -0.19% 20: 16.46% Comments: This was the second fund to list, just after UOBAPF. The increase in NAV in September was principally due to a reappraisal of property assets during Q3 20 from 961 million Baht in 2004 to 1,081 million Baht in 20. 5

6 Fund Name: CPN Retail Growth Property Fund Symbol: CPNRF Date Established: 11/08/20 Fund Type: Retail Property Details The fund initially comprises 2 shopping centres: Central Plaza Rama ll, 128 Moo 6, Rama ll Road, Bangkhuntien, Bangkok, and Central Plaza Rama lll, 79 Sathupradit Road, Yannawa, Bangkok. The Rama ll property was constructed in 2002, and comprises a 5-storey building with 2 basements and car parking space totaling 272,185 sq m, 98,519 sq m of which is leasable retail space, on a 96 rai site. The site is held on a lease expiring on 15 th August The Rama lll property is 8-storey with 2 basements and parking facilities on 12 rai of land, and was completed in The total floor area is 187,958 sq m of which 56,620 is leasable retail space. The fund holds the property on a 30-year lease, with two options to extend the lease for further periods of 30 years. Both sites exclude the Central Department Store and certain retail areas which have been sold on long leases (4.32% of Rama ll and 21.65% of Rama lll). Both sites were acquired by the fund for a total price of 10,613 million Baht. Fund Managers: TMB Asset Management Company Limited Property Managers: Central Pattana Public Company Limited Trustee: Citibank NA Auditors: PriceWaterhouseCoopers ABAS Limited Fund Size (by NAV): 11,162 million Baht NAV per Unit (31/10/): Baht Current (30/12/) Price per Unit: Baht Average Daily Trading Volume (November 20): 10,956,119 Baht (1,010,555 units) CPNRF - NAV & Market Price Baht Aug- Sep- Oct- Nov- Dec- NAV Price Dividends to Date: None 6

7 Comments This is the largest of the funds to date. However, as no dividend has yet been announced, no meaningful analysis of performance can yet be made. The majority of value being held in a 20-year leasehold property has implications for capital value preservation in the medium term. The sponsors and Property Managers of the fund, Central Pattana Public Company Limited, are proposing to offer further investments to the fund during 2006, which could double the size of the fund. 7

8 Fund Name: Millionaire Property Fund Symbol: MIPF Date Established: 25/01/20 Fund Type: Office/Commercial Property Details The investments are two buildings in Klongtoey, Bangkok: Maleenont Tower, a 36-floor office building of 49,118.4 sq m net at 3199 Rama IV Road; and Production House Building, a 12-floor production studio building of 12, sq m net at 3199/1 Rama IV Road. Both are on a freehold site of 3 rai 74 sq wah, acquired by the fund at a price of 1,880 million Baht. The initial estimate of income for 20 was 95 million Baht (before allowing for fund costs). Fund Managers: One Asset Management Limited Property Managers: Maleenont Tower Company Limited Trustee: Bangkok Bank Public Company Limited Auditors: ANS Audit Company Limited Fund Size (by NAV): 2,084 million Baht NAV per Unit (31/11/): Baht Current (30/12/) Price per Unit: Baht Average Daily Trading Volume (November 20): 26,725 Baht (2,591 units) MIPF - NAV & Market Price Baht Dec- 04 Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- NAV Price Dividends to Date: Payment Date Accounting Period Baht per Unit 13/12/ 25/01/ 30/09/ Yield on Par Value (10 Baht) Per Annum: Yield on Current Price Per Annum To Date: 5.00% To Date: 4.86% 20: 5.00% 20: 4.86% Last Period: 5.00% Last Period: 4.86% 8

9 Total Returns (Per Annum): To Date: 9.42% 20: 9.42% Comments This is the third fund to be established, and the second office fund after BKKCP. 9

10 Fund Name: MFC-Nichada Thani Property Fund Symbol: MNIT Date Established: /07/20 Fund Type: Residential Apartments Property Details The property assets are two freehold, 17-storey residential apartment buildings at Lakeshore, Nichada Thani, Bang Talad, Nontaburi. Lakeshore-North Apartment building (A2), completed in 1997, contains 34 units totaling 14,900 sq m, and Lakeshore-West (A3), completed in 2004, contains 36 units totaling 14,900 sq m. The buildings were acquired for 700 million Baht, and are leased to the Property Managers for a term of 7 years. The rental income, agreed between the Fund Managers and the Property Managers in advance, and estimated at million Baht per annum, is not dependent on occupation. Fund Managers: MFC Asset Management Public Company Limited Property Managers: Nichada Property Company Limited Trustee: Siam City Bank Public Company Limited Auditors: ANS Audit Company Limited Fund Size (by NAV): 718 million Baht NAV per Unit (30/11/): Baht Current (30/12/) Price per Unit: Baht Average Daily Trading Volume (November 20): 86,091Baht (8,609 units) MNIT - NAV & Market Price Baht NAV Price Jul- Aug- Sep- Oct- Nov- Dec- Dividends to Date: Payment Date Accounting Period Baht per Unit 28/10/ /07/ 30/09/ 0.13 Yield on Par Value (10 Baht) Per Annum: Yield on Current Price Per Annum To Date: 5.45% To Date: 5.40% 20: 5.45% 20: 5.40% Last Period: 5.45% Last Period: 5.40% 10

11 Total Returns (Per Annum): To Date: 9.65% 20: 9.65% Comments Note that the Property Managers of this fund are lessees, rather than Property Managers acting in an agency capacity, and that the income to the fund is not dependent on occupancy. The property is located in a popular suburban expatriate community. 11

12 Fund Name: Baan Sansiri Property Fund Symbol: SIRIPF Date Established: 09/09/20 Fund Type: Residential Property Details 25 houses at Sukhumvit 67, Wattana, Bangkok, developed by, and leased back to, Sansiri PLC for a term of 5 years at an annual rent of not less than 70 million Baht (before fund expenses), at a purchase price of 850 million Baht. The Fund may sell houses free of the lease, subject to adjustment of the minimum lease-back rent. On expiry of the 5-year lease, the Fund has a put option to sell all or some of the properties back to Sansiri PLC at the original purchase price. Fund Managers: ING Funds (Thailand) Company Limited Property Managers: Sansiri PLC (by way of lease) Trustee: Thai Military Bank PLC Auditors: Ernst and Young Office Ltd Fund Size (by NAV): 879 million Baht NAV per Unit (30/11/): Baht Current (30/12/) Price per Unit: 9.85 Baht Average Daily Trading Volume (November 20): 66,493 Baht (6,745 units) SIRIPF - NAV & Market Price Baht NAV Price Aug- Sep- Oct- Nov- Dec- Dividends to Date: None Comments The put option, giving the fund the right to sell the property back to the sponsors/property managers at the original purchase price, is an unusual feature in this Fund. As no dividend has yet been announced, no meaningful analysis of performance can yet be made. 12

13 Fund Name: TICON Property Fund Symbol: TFUND Date Established: 18/04/20 Fund Type: Industrial Property Details 39 freehold, single-storey factories with mezzanine offices of between 1,400 and 5,750 sq m (total: 89,900 sq m), leased to various tenants on leases of up to 3 years, on Amata Nakorn Industrial Estate, Chonburi Province (20 factories), Rojana Industrial Park, Ayuthaya Province (10), Hi-Tech Industrial Estate, Ayuthaya Province (5), Bangpa-In Industrial Estate, Ayuthaya Province (3) and Amata City Industrial Estate, Rayong Province (1). Fund Managers: ING Funds (Thailand) Company Limited Property Managers: TICON Industrial Connection Public Company Limited Trustee: Citibank NA Auditors: Ernst & Young Fund Size (by NAV): 1,774 million Baht NAV per Unit (30/11/): Baht Current (30/12/) Price per Unit: Baht Average Daily Trading Volume (November 20): 1,084,631 Baht (110,991 units) TFUND - NAV & Market Price Baht Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- NAV Price Dividends to Date: Payment Date Accounting Period Baht per Unit 12/09/ 18/04/ 30/06/ /12/ 01/07/ 30/09/ 0.20 Yield on Par Value (10 Baht) Per Annum: Yield on Current Price Per Annum To Date: 7.74% To Date: 7.74% 20: 7.74% 20: 7.74% Last Period: 8.00% Last Period: 8.00% 13

14 Total Returns (Per Annum): To Date: 7.74% 20: 7.74% Comments This is the first and largest of the two industrial property funds. The Fund Managers have called a unitholders meeting on 16 th January 2006 to seek unitholders approval to increase the capital of the fund by up to 2.2 billion Baht to acquire additional investments, which would more than double the fund size. The assets to be acquired would be further factory buildings from the sponsors and Property Managers, TICON Industrial Connection Public Company Limited. This fund is likely to be the first to undertake a capital increase and acquire a second tranch of investments. 14

15 Fund Name: Thai Industrial Fund 1 Symbol: TIF1 Date Established: 09/06/20 Fund Type: Industrial Property Details 11 freehold, single-storey factories with mezzanine offices on Hi-Tech Industrial Estate, Ayuthaya Province (8 factories), Navanakorn Industrial Promotion Area, Pathum Thani Province (1), Bangpa-In Industrial Estate, Ayuthaya Province (1), Latkrabang Industrial Estate, Latkrabang, Bangkok (1), and a 4- storey factory at Bangkadi Industrial Park, Pathum Thani Province. The total floor area is 24,885 sq m (16,077 sq m of single-storey factories and 8,811 of flatted factory). Fund Managers: ING Funds (Thailand) Company Limited Property Managers: Thai Factory Development Public Company Limited Trustee: Citibank NA Auditors: Ernst and Young Office Limited Fund Size (by NAV): 512 million Baht NAV per Unit (30/11/): Baht Current (30/12/) Price per Unit: 9.90 Baht Average Daily Trading Volume (November 20): 26,772Baht (2,673 units) TIF1 - NAV & Market Price Baht May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- NAV Price Dividends to Date: Payment Date Accounting Period Baht per Unit 13/12/ 09/06/ 30/09/ Yield on Par Value (10 Baht) Per Annum: Yield on Current Price Per Annum To Date: 7.91% To Date: 7.99% 20: 7.91% 20: 7.99% Last Period: 7.91% Last Period: 7.99% 15

16 Total Returns (Per Annum): To Date: 4.68% 20: 4.68% Comments This is the second and smaller of the two industrial funds. 16

17 Fund Name: UOB Apartment Fund 1 Symbol: UOBAPF Date Established: 16/09/2003 Fund Type: Serviced Apartment Property Details The sole asset is Natural Ville Executive Residence, Lang Suan Road, Patumwan, Bangkok, a leasehold serviced apartment building on 28 floors plus basement, on just over 1 rai of land. The property is held on a 30-year lease from the Bureau of the Crown Property, expiring on 31 st May 2033, which the Fund acquired for 818 million Baht. Fund Managers: UOB Asset Management (Thai) Company Limited (formerly BoA Asset Management Company Limited) Property Managers: Natural Park Ville Company Limited Trustee: Bank of Ayudhya Public Company Limited Auditors: ANS Business Consultants Company Limited Fund Size (by NAV): 889 million Baht NAV per Unit (30/11/): Baht Current (30/12/) Price per Unit: 7.50 Baht Average Daily Trading Volume (November 20): 3,623 Baht (455 units) UOBAPF - NAV & Market Price Baht NAV Price Oct-03 Dec-03 Feb-04 Apr-04 Jun-04 Aug-04 Oct-04 Dec-04 Feb- Apr- Jun- Aug- Oct- Dec- Dividends to Date: Payment Accounting Baht per Baht per Unit Date Period Unit for Year 27/02/04 16/09/03 31/12/ /09/04 01/01/04 30/06/ /03/ 01/07/04 31/12/ /09/ 01/01/ 30/06/

18 Yield on Par Value (10 Baht) Per Annum: Yield on Current Price Per Annum To Date: 5.12% To Date: 6.83% 20: 6.67% 20: 8.89% Last Period: 5.00% Last Period: 6.67% Total Returns (Per Annum): To Date: -8.85% 20: -4.19% Comments The Fund was formerly called BoA Apartment Fund 1 (BOAAPF) before changing its name in November 20. This was the first fund to list. The decrease in NAV in June 20 was principally due to a reappraisal of property assets during the six month period ended 30 th June 20, from 926 million Baht in 2004 to 850 million Baht in

19 Summary 19