In the News: 2005

Fund to Yield 6-8%: Assets Will Include 39 Ticon Factories

Bangkok Post
21 January 2005

Ticon Industrial Connection Plc (Ticon), Thailand's leading provider of leased factories, projects that its soon-to-be-listed 1.8-billion-baht property fund will pay a 6-8 percent dividend yield to investors, according to managing director Wei Cheng Kuan.

The fund, due to be launched in March, will hold 39 factories leased out on five industrial estates and parks located in in Ayutthaya, Chon Buri and Rayong.

Capital generated by selling the factories to the fund will be used to finance the company's business expansion.

Ticon's expansion strategy focuses on building large factories containing 2,000 square metres of space for multinational companies and constructing more medium-sized leased factories for small and medium enterprise (SME) clients.

Most of the fund's earnings will come from leasing fees, generating returns of as much as 8-10 percent of the investment cost. After a 2 percent management fee is deducted, unit holders are expected to earn a return of 6-8 percent. The fund has set a policy to pay 90 percent of its net profit as a dividend.

"As investors in Thailand have never before had the opportunity to participate in this kind of property fund, a net yield of 6-8 percent derived from primarily international tenants of prime industrial property is likely to be appealing to those seeking higher returns than what bank deposit offer," said Mr Wei.

The fund's criteria stipulate that investments must be in industrial assets located in Thailand with rental income the main source of revenue, or industrial leaseholds with 75 percent of the net asset value remaining.

Only developed properties or those at least 80 percent completed will be considered for new investment. In addition, the fund cannot invest in idle land, except if it helps generate income, and any purchased assets must be appraised by two appraisers.

Ticon will hold a 33 percent stake in the fund, possibly rising to 50 percent once the fund is listed on the stock market.

Virapan Pulges, a company director, said Ticon would submit a listing application for the fund to the Securities Exchange Commission next week.

Ticon now has 140 leased factories and 13 pre-leased factories. Another 15 are available for prospective leaseholders and 64 are under construction. The number of factories in its portfolio at the end of 2004 rose 25.4 percent from the year before. Space under rental rose to 350,000 square metres from 200,000 sq m from 2003.

Ticon shares closed yesterday at 8.20 baht, down 10 satang.