The company is confident that the unitholders will benefit from its conversion, and allowing TREIT to invest at least Bt3.5 billion in additional assets.
TICON unveiled plans to convert three property funds - TFUND, TLOGIS, TGROWTH into TREIT by fixing a swap ratio at rate of 1 investment units of funds to 0.9874 / 1.0129 / 0.8673 trust units of TREIT, accompanied by a cash of 1.6977 / 1.7415 / 1.4911 baht per unit respectively. Therefore, the funds/trust unitholders' meeting will be held during 18-19 October. The group is confident that the move will surely bolster unitholders' benefits from the conversion. After a successful merger, TREIT will further invest at least Bt3.5 billion in TICON assets, which will drive a huge asset size to reach Bt35 billion, making TREIT become the largest industrial trust in Thailand.
Mr. Virapan Pulges, Chief Executive Officer of TICON Industrial Connection Public Company Limited, the leading developer of integrated industrial properties in ASEAN, disclosed 'TICON's property funds - TFUND, TLOGIS and TGROWTH, will be converted into TREIT to make the combined asset valued of more than Bt32 billion. The conversion will enhance future opportunities in new asset investments, as TREIT, classified as an investment grade trust, can borrow up to 60% of its consolidate assets. After the conversion, TREIT will have significantly lower total debt to total assets ratio of approximately 17%. TREIT's unitholders will thus gain more benefits from leverage such as asset acquisition and asset enhancement which will subsequently yield higher return. Moreover, the larger capitalization will attract more investment with higher liquidity from both domestic and foreign investors.'
The funds/trust unitholders' meeting will be held on 18-19 October at Plaza Athenee Hotel to vote on the conversion plans. 'If approved, TREIT will file the conversion plan to the Securities and Exchange Commission to conclude the transfer of fund assets and liabilities by year-end 2017,' disclosed Mr. Virapan.
Meanwhile, Mr. Peerapat Srisukont, Managing Director of TICON Management Co., Ltd. (TMAN) as the REIT manager of TICON Freehold and Leasehold Real Estate Investment Trust (TREIT), elaborated the conversion plans, 'We will issue up to 2.036 billion new trust units with a cash component of Bt3,794 million to receive the transfer of TFUND, TLOGIS, and TGROWTH assets and liabilities in exchange for TREIT. The swap ratio for TFUND : TREIT is set to stand at 1 : 09874 accompanied by a cash component of 1.6977 baht/unit; TLOGIS at 1 : 1.0129 with cash of 1.7415 baht/unit; and TGROWTH at 1 : 0.8673 with cash of 1.4911 baht/unit. Not more than Bt294 million in cash will be utilized to repay loans taken out by TGROWTH.
Moreover, TICON's board of directors on 8 September 2017 approved to undertake to sell TICON's asset to TREIT for total amount of not less than Bt3.5 billion following the completion of conversion. In case TREIT cannot agree to acquire TICON assets by 31 December 2018, TREIT will increase its leverage to pay off extra dividends from accrued profits, and/or reduce capital to pay off capital reduction to TREIT unitholders.
'Following the conversion, TREIT's strengths are attributed to its strong diversified asset base to grow future business on the basis of selected strategic locations, lease terms, and the number of lessees. The broadly diversified portfolio of real estate investment will provide a balanced revenue stream from a wide spectrum of sources and varied categories of lessees. TREIT will have factories and warehouses in 22 locations, spreading over seven major provinces with high economic growth. There will be a total number of 492 units totaling 1,489,860 square meters with 69% freehold and 31% leasehold. Warehouses account for 192 units of 739,125 square-meter space and factories, 300 units of 750,735 square meters. With the additional assets from TICON, TREIT will become the largest REIT in Thailand.' explained Mr. Peerapat.