One Asset Management (ONEAM) is gearing up to introduce Thai Industrial Real Estate Investment Trust (TIREIT) units to general investors, aiming to capitalize on the evolving investment landscape as high interest rates recede. The offering is scheduled from October 7 to 18, 2023, according to CEO Pote Harinasuta.
Key Takeaways
- TIREIT units will be available for general investors from October 7-18.
- The conversion from Thai Industrial Fund 1 (TIF1) aims to enhance investment opportunities.
- TIREIT offers a dividend return of 7%, up from 5.8% prior to the conversion.
- The trust focuses on freehold assets in leading industrial estates and warehouses.
The introduction of TIREIT comes at a time when the Thai economy is showing signs of recovery, bolstered by improvements in government spending, investment, and consumption. Pote Harinasuta noted that a clearer political landscape is also contributing to a more favorable short-term investment sentiment.
The Bank of Thailand has maintained a tight monetary policy, with expectations that the policy rate will remain at 2.5% in 2024, potentially dipping to 2% in the following year. This environment is conducive for alternative assets like TIREIT, which are becoming increasingly attractive for risk diversification.
TIREIT’s Unique Position
TIREIT stands out as the only trust in Thailand that holds 100% freehold in land and buildings located in prominent industrial estates and warehouses. This unique structure is expected to enhance the potential for asset purchases, thereby boosting rental income.
- Current Valuation: Estimated at 2.25 billion baht.
- Growth Potential: Industrial land for rent is projected to grow by 18-20% annually from 2023 to 2025.
The demand for industrial land and warehouses is reflected in the high occupancy rates, with fully built factories at 81.8% and warehouses at 79.7%. This solid demand is expected to continue, driven by economic growth and government initiatives aimed at increasing public investment.
Future Prospects
The growth of e-commerce and logistics businesses in Thailand is another factor supporting the revenue potential from rental industrial land and warehouses. Pote emphasized that TIREIT is well-positioned to benefit from these trends, offering sustainable returns that appeal to long-term investors.
- Dividend Returns: TIREIT now offers a 7% return on dividends, aligning with estimated returns of industrial REITs at around 8% per annum.
- Asset Composition: TIREIT’s assets are divided into two categories:
- Previous assets from TIF1, now under TIREIT, with 100% freehold in various industrial estates.
- Newly acquired assets post-conversion, also with 100% freehold, including fully occupied Green Park facilities.
The trust generates recurring income through monthly rent payments from over 30 tenants across diverse sectors, including automotive, packaging, and medical supplies. With a history of contract renewals, TIREIT is set to provide stable income for its investors.
Conclusion
As ONEAM prepares to launch TIREIT units, the investment community is keenly watching the developments. With a favorable economic outlook and a unique asset structure, TIREIT is poised to attract investors looking for sustainable returns in a changing market landscape.
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