Thai Hospitality REIT Liquidates With $106M Sale of Jakarta, HCMC Hotels

After going public less than six years ago, Thailand-listed Strategic Hospitality REIT has sold its entire three-hotel portfolio for $106.1 million, narrowly avoiding an imminent loan default.

The disposal of the three assets — the five-star Pullman Jakarta Central Park in the Indonesian capital and the Ibis Saigon South and Capri by Fraser in Vietnam’s Ho Chi Minh City — was completed on Thursday, SHREIT said in a stock filing. The trust identified the buyer of the 623-key portfolio as EverLand Opportunities IX Limited, a BVI-incorporated company.

JLL advised SHREIT on the transaction, which the consultancy described as the first hotel portfolio sale in Southeast Asia during 2023. Julien Naouri, senior vice president for Asia Pacific investment sales at JLL’s hotels and hospitality group, said the deal showed that investors are “extremely confident” about the fundamentals of the region’s hotel sector.

“The sale of this unique hotel portfolio not only underscores the resurgence of deal activity in Southeast Asia, but also reinforces the ongoing recovery of cash flows of hotels in the region,” Naouri said in a release.

Dodging Default

Last December, unitholders voted in favour of seeking a buyer for SHREIT after management warned that COVID-19’s impact on cash flow had led to hardship in meeting the trust’s debt obligations, including a $62.3 million loan from Deutsche Bank coming due that month.

After winning a six-month extension on the loan, SHREIT’s manager used part of the proceeds of the portfolio sale to repay the full debt this week, said managing director Christophe Forsinetti. The board of directors will meet next week to sort out the final distributions to unitholders before the trust is dissolved.

SHREIT listed on the Stock Exchange of Thailand in December 2017, with the trio of overseas hotels as seed assets, and has since lost more than 65 percent of its market value.

The trust was set up by an investor group led by Patan Somburanasin, a former managing director of Thailand’s Ticon Logistics Park Co, and James Lim, the co-founder of Hong Kong fund manager Calibration Partners and a former executive of Lehman Brothers, BNP Paribas and Barclays Capital. Former Central Group executive Chanitr Charnchainarong served as non-executive chairman, while Lim is listed as an executive director and chief business development officer.

Doomed Expansion

In a flush of pre-pandemic optimism, SHREIT’s manager announced in March 2019 that it was aiming to increase the trust’s assets under management to $1 billion within five years, with plans to invest in properties worth $150 million to $200 million each year. The REIT’s AUM amounted to $143 million at the time and stood at roughly the same level ahead of the liquidation.

SHREIT’s crown jewel, the 317-room Pullman Jakarta Central Park, connects directly to the city’s Central Park mega-mall and by itself has an appraised value north of $104 million.

In Vietnam, the 175-room Capri by Fraser and the 140-room Ibis Saigon South are the only internationally branded hotels within walking distance of offices tenanted by multinational companies and the Saigon Exhibition and Convention Centre in the city’s District 7, south of the Tan Thuan Export Processing Zone, JLL said.