Warehouse Firm Eyes Real Estate Investment Trust

WHA Corporation plans to launch its first real estate investment trust, backed by three warehouse projects

April 01--WHA Corporation Plc, a SET-listed developer of warehouses and distribution centers, plans to launch its first real estate investment trust (REIT) worth 4.7 billion baht by the fourth quarter this year, backed by three warehouse projects with a combined area of 167,000 square meters.

The company also aims to add assets worth 4-5 billion baht each year to enlarge the REIT, said WHA chief executive Somyos Anantaprayoon.

The warehouse projects underlying the planned REIT are the company's warehouse at Lat Krabang (phases 1 and 2), the WHA Mega Logistics Center at Bang Na-Trat Road Km 18 and the WHA Mega Logistics Center at Bang Na-Trat Km 23.

WHA will be the property manager, while a new subsidiary will manage the REIT.

Mr Somyos said the company has reversed its previous plan to sell assets to the WHA Premium Factory & Warehouse fund (WHAPF), given a REIT's more flexible rules and regulations.

The launch of the REIT has been delayed this year over an unsettled tax issue.

WHA will hold at least a 20 to 30 percent stake in the REIT, and the asset sales to the trust will create a margin of 30 percent for the company, said Mr Somyos, adding that WHA can use the proceeds arising from asset sales to invest in new projects.

Moreover, in the long run, the company can earn revenue from being the property manager and obtain dividends from investing in the unit trusts.

Mr Somyos said WHA's return on equity was a fairly high 41 percent last year. The company expects ROE of at least 30 percent each year.

WHA also plans to set up an infrastructure fund backed by solar cells next year, with assets worth 2 billion baht.

The solar cell project has a power generating capacity of 4 to 8 megawatts and will come on line next month. WHA wants to raise the capacity to 20 to 30 MW before setting up the fund.

Mr Somyos said management continues to pursue growth and use financial tools to reduce funding costs.

The company is seeking investment opportunities overseas through partnerships. The first investment will be in consumer products in Indonesia, and another joint venture is to be disclosed by the second half of 2014.

Shares of WHA closed yesterday on the SET at 31.3 baht, unchanged, in trade worth 13.6 million baht.

Copyright 2014 - Bangkok Post, Thailand