Real Estate

DC, KTBST launch B2.5bn hotel equity trust

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Mr Kaplan (left) and Mr Thitiphat (right) with Supakit Eimsamank, senior vice-president of Destination Capital. Mr Kaplan (left) and Mr Thitiphat (right) with Supakit Eimsamank, senior vice-president of Destination Capital.

Destination Capital (DC) and KTB Securities Thailand (KTBST) have joined forces to launch the DESCAP 1 Private Equity Trust for hotel and resort acquisition in Thailand, with a project investment value of 2.5 billion baht.

DESCAP 1 Private Equity Trust is the first major investment in Thailand’s hotel and resort sector since the Covid-19 outbreak.

DC and KTBST are the co-settlors and co-trust managers, with MFC Asset Management as the trustee to raise funds and launch the trust.

DESCAP 1 Private Equity Trust will acquire freehold four-star hotels of 159-250 rooms in prime destinations in Bangkok, Pattaya, Hua Hin and Phuket, where sentiment is expected to rebound the quickest after the Covid-19 crisis subsides.

“The trust is expected to have a target return of 15% per year with a 5-7 year holding investment period,” said James Kaplan, chief executive of DC.

“I have been in Thailand since 1978 and have seen many serious situations happen in Thailand, including the 1997 financial crisis, the 2011 floods, the [colour-coded] political conflicts. But Thailand’s tourism always rebounded afterward.

“This time we are experiencing Covid-19, which is not only [happening] in Thailand, but across the world. I think the tourism industry will be back to normal after the vaccine is successfully [developed], which will take around four years from now. For the domestic political conflict at present, it is hoped it will take a shorter period to conclude.”

Thitiphat Thaveesin, executive vice-president of KTBST, said the investor target group of DESCAP 1 Private Equity Trust is comprised of institutional and high-net-worth investors with a minimum investment of around 200 million baht per person.

If the investment amount is less than 200 million baht, high-net-worth investors can invest through mutual funds.

The private equity trust distribution will be held from Oct 26 to Nov 12.

Asset acquisition under DESCAP Private Equity Trust 1 is expected to begin next month.

Potential investment assets include two hotels in Pattaya with anticipated buying prices of 240 million and 880 million baht. The expected selling prices for the two hotels are estimated at 646 million and 1.64 billion baht.

A four-star hotel in Phuket is another potential investment asset. The trust expects to purchase at 537 million baht, and the anticipated selling price is estimated at 931 million.

“The Covid-19 pandemic has significantly affected travelling and the tourism industry in Thailand, yet it also creates a once in a lifetime investment opportunity for future capital gains,” Mr Thitiphat said.

“We plan to launch the second and the third private equity trusts in the future if demand for investment is high enough.”

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