Prospect Logistics and Industrial Real Estate Investment Trust or PROSPECT REIT has announced its first capital increase to invest in two high-potential properties, totaling approximately 70,129 square meters in prime locations along Bangna-Trad Road, with an investment value not exceeding 1.8 billion baht. The projects are Bangkok Free Trade Zone 2 (BFTZ 2) and Bangkok Free Trade Zone 3 (BFTZ 3).

The Free Zone area is advantageous for businesses involved in import and export, attracting investors to expand their operations as the global economy recovers. The first-year return is projected to be as high as 8.29%. Following the investment, the asset value is expected to reach 5.338 billion baht, with an increased proportion of freehold investments, enhancing the long-term stability of the trust.

Prospect Logistics and Industrial Real Estate Investment Trust (“PROSPECT REIT”) was established on August 14, 2020 and began investing in leasehold rights for land and buildings in Bangkok Free Trade Zone 1 “BFTZ1” located on Bangna-Trad Road, Km 23, on August 18, 2020. It was registered and started trading on the Stock Exchange of Thailand on August 20, 2020. PROSPECT REIT focuses on investing in warehouse and factory properties that have the potential to generate income and reasonable returns, both from properties owned by the main sponsor and from other developers. Currently, the main sponsor continues to develop potential projects in nearby and other areas.

Ms. Ratchanee Mahatdechkul, Managing Director of Prospect Development Co., Ltd., the developer and manager of the Bangkok Free Trade Zone (BFTZ) and the main sponsor of the trust, stated that during the COVID-19 pandemic, it has been proven that the factory and warehouse rental business has grown strongly against the trend and is expected to continue growing in line with the recovering global economy. Key drivers include product exports, the growth of e-commerce, and the expansion of booming industries such as electric vehicles (EV), solar cell manufacturing, and electronics components.

Additionally, foreign investors are looking to relocate their production bases from China to Thailand to mitigate supply chain risks. As this demand increases, the warehouse and factory rental business benefits, especially in the prime industrial area of Bangna-Trad.

The Bangkok Free Trade Zone 1 (BFTZ 1), located on Bangna-Trad Road, Km 23, is part of the assets in PROSPECT REIT, and it currently has nearly full occupancy.

The demand for space in BFTZ 1 has consistently been high, reinforcing the strong foundation of its prime location, Free Zone area, and high-quality buildings that cater to various industries. Although the surrounding Bangna-Trad area has many factories and warehouses for rent, there are not many large Free Zone areas like the Bangkok Free Trade Zone project, which is another advantage supporting the growth potential of BFTZ 1 in all situations. The demand for factory and warehouse space in this zone remains continuous.

Prospect Development continues to develop new projects, such as BFTZ 2 on Theparak Road and BFTZ 3 on Bangna-Trad Road, Km 19, which are two new projects that PROSPECT REIT is preparing to invest in. The trust is also expanding projects to strategic industrial locations in the upper central region and the Eastern Economic Corridor (EEC) to support the growth of the industrial sector and investment promotion policies. Currently, the projects under management have a total area of approximately 1,000,000 square meters.

Ms. Oranong Chaitong, Chief Executive Officer of Prospect REIT Management Co., Ltd., as the manager of PROSPECT REIT, stated, “With a strategy focused on quality assets and favorable investment timing due to the reopening of the country and the economic recovery, PROSPECT REIT has decided to proceed with its first capital increase, marking an important step for further growth.

The projects BFTZ 2 and BFTZ 3 that are set for investment are distinguished by their locations in the potential Bangna-Trad zone, a strategic hub for industry and logistics, supporting both domestic and international businesses. The advantages include:

  • Both projects are located in the purple zone for industrial activities, allowing for both warehouse and factory operations.
  • They are new projects with modern Ready Built buildings, where each unit is larger, enabling tenants to immediately establish their production bases.
  • The area of the BFTZ 3 project to be invested in is entirely within the Free Zone.

Every investment by PROSPECT REIT is thoroughly researched for feasibility, and it is believed that this investment in high-quality assets will create growth opportunities, leading to good long-term returns for unit holders.

Currently, PROSPECT REIT manages two projects with a total area of warehouse and factory space for rent of 222,203 square meters, including:

  • BFTZ 1 on Bangna-Trad Road, Km 23
  • X44 Bangna KM.18

As for the additional two projects that PROSPECT REIT will invest in, they are properties of Prospect Development Co., Ltd., which include:

1) Bangkok Free Trade Zone 2 (BFTZ 2) on Theparak Road with a rental area of 20,996 square meters, consisting of 12 Ready Built units divided into three types: warehouse, stand-alone factory, and small factory, with an investment in leasehold rights for a period not exceeding 28 years.

2) Bangkok Free Trade Zone 3 (BFTZ 3) on Bangna-Trad Road, Km 19 with a rental area of 49,133 square meters, consisting of 23 Ready Built warehouse units located entirely within the Free Zone, with an investment in freehold.

Since the establishment of the trust, the properties managed by PROSPECT REIT have maintained a rental rate of never less than 90%. As of the end of 2022, the rental rate was as high as 93%, with a contract renewal rate of 97% for 2022. The tenants are diversified across various industries essential for consumption, such as food, paper, recycling, and logistics services from various nationalities, including Japanese, Thai, Chinese, French, and American, reflecting tenant confidence and the potential of property management, resulting in outstanding performance in 2022 with revenue of 445.21 million baht and net investment profit of 284.83 million baht. The latest payout to unit holders was 0.2200 baht per unit, totaling 0.9025 baht per unit for the entire year.

After the capital increase and additional investments, the trust will manage a total of 292,332 square meters of assets, with the asset value according to the trust's financial statements expected to rise from 3.538 billion baht to 5.338 billion baht. Following this capital increase, the trust manager is ready to continue exploring the feasibility of investing in additional high-quality assets, both from the main sponsor of the trust, which is expanding projects to strategic industrial locations in the upper central region and the Eastern Economic Corridor (EEC), as well as properties from other developers to be included in the trust. The goal is to increase the asset value to 10 billion baht by 2024.

Mr. Manop Petchdamrongsakul, Head of Large Business at TISCO Bank Public Company Limited, as the financial advisor and distributor manager for PROSPECT REIT, stated, “The industrial trust is an interesting investment that provides consistent returns to investors. In the past, PROSPECT REIT has been able to deliver first-year yields higher than projected and has consistently paid good returns every quarter. After this additional investment, the estimated payout for unit holders of PROSPECT REIT will increase from 0.84 baht per unit to 0.86 baht per unit (for the period from January 1, 2023, to December 31, 2023), which is a high return amidst the current volatile economic conditions, providing a good investment option to diversify investors' portfolios.

This additional investment is in the form of freehold (76% of the investment value), along with leasehold assets with longer lease terms, which will create long-term stability for the trust.

PROSPECT REIT will offer up to 130,000,000 additional trust units for sale, with existing unit holders having the right to subscribe to units listed in the register as of February 21, 2023, not exceeding 117,000,000 units. The subscription ratio is set at 1 existing trust unit for 0.4775 additional trust units, with the offering period from March 8-14, 2023, at a maximum price of 9.7 baht per trust unit. The XR mark will be effective on February 20, 2023. Subscriptions can be made at the head office of TISCO Securities Co., Ltd. or online at www.tiscosec.com, and the general public can subscribe for trust units from March 16-20, 2023, at the offices of the trust unit distributors or other channels as designated by the distributors.

It is expected that the company will list the additional trust units on the Stock Exchange of Thailand within March 2023.

For more information, visit www.prospectreit.com | https://www.facebook.com/ProspectRM