Destination Capital PTE., LTD., (DC) and KTB Securities (Thailand) Public Company Limited (KTBST SEC) is delighted to announce the launch of DESCAP 1 Private Equity Trust, which will acquire hotels in Thailand targeting investor returns of up to 15% per year. This announcement comes after DC signed agreements with KTB Securities (Thailand) Public Company Limited (KTBST SEC) as the settlor and the Trust Manager and MFC Asset Management Public Company Limited (MFC) as the Trustee, to capitalize and launch DESCAP 1 Private Equity Trust.
The objective of DESCAP 1 Private Equity Trust is to raise THB 2.5 billion through its trusted partnership with KTBST SEC and MFC, offering an alternative asset class for investor portfolios. The trust will acquire freehold four star hotels of 150 – 250 rooms in prime destinations of Bangkok, Pattaya, Hua Hin and Phuket which are viewed as destinations expected to rebound the quickest after COVID-19.
The investment strategy is to acquire urban and resort hotels and then renovate, reposition, and rebrand them to increase value of the properties in order to generate meaningful returns to investors. Utilizing the experience gained by Destination Group with its 24-year track record in Thailand of buying, managing, and selling hotels, particularly during times of distress, DESCAP1 targets a 15% p.a. returns with a 5-7 year holding period.
“Destination Capital will source, acquire, reposition and asset manage hotels acquired by DESCAP 1 Private Equity Trust, with KTBST SEC acting as Trust Settlor and Trust Manager and MFC as Trustee under this SEC regulated structure,” said Mr. James A. Kaplan, CEO of Destination Capital PTE. LTD. (DC), adding “We are pleased to play such an important role to support the rejuvenation of the Thai travel and tourism industry with the announcement of DESCAP 1 Private Equity Trust. This trust will invest in strategic hospitality assets to facilitate re-employment and hotel re-openings to re-launch Thailand as a preferred global travel destination. This could not have been done without the support of our Trustee and Trust Manager.”
Mr. Thitiphat Thaveesin, Executive Vice President, Corporate Finance Solutions & REIT Department of KTB Securities (Thailand) Company Limited (KTBST SEC) said that the investment highlight of DESCAP 1 Private Equity Trust are as follow; this is the right time to acquire strategic hospitality assets at lower price (target with at least 30% discount from neutralized fair value). DESCAP 1 can enhance asset value through Destination Capital’s proven strategies and track record including renovation and repositioning of the assets. Investing in DESCAP1 is in a low-volatile asset class with superior risk-adjusted return expected at 15% p.a. ++. Besides, investing in DESCAP1 is also a way to support and rejuvenate Thai travel and tourism industry.
DESCAP 1 Private Equity Trust has three investment strategies, which are
- Investment Strategies which focus on acquiring beachfront or fronting beachfront properties such as Pattaya, Hua Hin, Phuket, and major travel destination in Thailand. For Bangkok, the trust focus on acquiring hotel in CBD locations. The trust will focus on acquiring between 4 – 6 four-to-six star hotels up to 8 hotels with target hotel properties ranging from 150 keys to 250 keys.
- Value Creation, the trust will invest in a low-volatile asset class with 5R strategies, which are Renovate, Rebuild, Rebrand, Reposition, and Recapitalization.
- Exit strategies, IPO / REIT which is exit through the Stock Exchange of Thailand), Merger & Acquisition – M&A which is selling the shares to a larger firm or potential buyers), Trade-Sale which is selling shares or assets to other investors, venture capitals, or private equity investment, Buyback which is owners buyback shares or assets, and Liquidation which is selling all shares to potential buyers.
DESCAP 1 Private Equity Trust has target commitment amount at THB 2.5 billion with five years plus two one-year-extension of investment term. The trust has the target return at 15% per annum.
The target group of DESCAP 1 Private Equity Trust is institutional and/or High-Net-Worth Investors with the minimum investment amount of THB 200 mm per person and it is planned to launch during November 2020. In case the investment amount is less than THB 200 mm, High-Net-Worth Investors can invest through the Mutual Fund. In case the investment amount is less than THB 200 mm, High-Net-Worth Investors can invest through the Mutual Fund.
The potential investment hotel of DESCAP 1 Private Equity are 1. Pattaya Hotel 1, which is in Chonburi. It is the medium size hotel with 116 rooms. We estimate the purchase price at THB 240 million and the anticipated selling price at THB 646 million.
- Pattaya 2, which is in Chonburi. It is the large size hotel with 272 rooms. We expect to purchase the hotel in 2020 with the purchase price at THB 880 million and the anticipated selling price in 2025 at THB 1,639.9 million.
- Phuket Hotel 3, which is a 4-star hotel with 177 rooms. We expect to purchase the hotel in 2020 at THB 537 million and the anticipated selling price at THB 931 million.
“COVID-19 pandemic has significantly affected travel and tourism to Thailand, yet it also created a ‘once in lifetime’ investment opportunity in prime hotels and resorts located in well-known global destinations through DESCAP1 Private Equity Trust. It is also a way to support and rejuvenate Thai travel and tourism industry.” Thitiphat said.