Goldman and Apollo Set to Reap $320M Payday From Stake in Bangkok’s Tallest Building

The developer of Thailand’s tallest skyscraper is buying back its stake in Bangkok’s MahaNakhon tower from Goldman Sachs and Apollo Global Management for up to 10 billion baht ($320 million).

Local builder Pace Development, which sold the stake in the 77-storey, mixed-use tower project to the US investment duo in January of last year, announced the buyback to the Stock Exchange of Thailand, saying its board had approved the transaction. The company added that negotiations are ongoing as the terms and conditions of the sale have not been finalised.

Pace Finds Local White Knight

In tandem with the move, Pace is selling assets in the project including its hotel, observation deck and adjacent retail block to Thai duty-free retail giant King Power International Group for 14 billion baht ($449 million). The asset sale will shore up Pace’s finances and help the company pay for the acquisition from Apollo and Goldman, while freeing Pace to move ahead on developing the tower’s residences as well as a trio of other luxury projects underway in Thailand.

The $1 billion MahaNakhon project, whose main tower was completed in 2016, features 209 units of luxury residences managed by Ritz Carlton, a boutique hotel, and a retail and lifestyle centre.

Goldman and Apollo Make $85M Plus Interest in One Year

Goldman Sachs and Apollo Global Management bought their interest in the MahaNakhon building for $235 million in January of last year. The investment bank and private equity firm invested $216 million in equity and $18.8 million in financing for a 49 percent stake in a pair of companies that were developing the hotel and retail portion of the landmark project.

Pace executed the deal with Goldman Sachs and Apollo at a time when it was said to be under pressure from its primary lender, Siam Commercial Bank, to sell assets and bring down its debt to equity ratio.

Through the deal, Apollo picked up a 49 percent share in Pace Project I and Goldman Sachs a 48.72 percent interest Pace Project 3. Shares in the two project companies were converted into a stake in the tower, and Pace used the equity infusion to complete the project.

Following the transaction announced this week, Pace will become the sole shareholder in the pair of companies. In the announcement, Pace said it had originally aimed to sell off the project to a real estate investment trust (REIT) upon completion.

Located between Sathorn and Silom Roads in Bangkok’s traditional banking district, the 314-metre MahaNakhon building broke ground in 2011. Besides the high-end residences which take up about 50 floors of the building, the complex includes a 155-key, Marriott International-managed hotel and the MahaNakhon CUBE, the seven-storey retail and dining component that was completed in 2014. The hotel and observation deck have yet to open.

Pace to Move Ahead on Other Projects

The sale of parts of the complex to Bangkok-based King Power will enable Pace to receive “cash flow more quickly than its original plan since the Company originally planned to divest the assets after the completion of construction,” according to the stock exchange filing. “The cash flow from disposition of assets will increase Company’s financial liquidity and will be a capital to purchase shares from Apollo and Goldman.”

Pace added that the proceeds will help the company trim debt and continue development of the tower’s Ritz-Carlton Residences Bangkok, which is reported to be more than 75 percent sold. The proceeds will also be used to develop two other luxury condo projects in Bangkok — the 8 billion baht Nimit Langsuan, and the 3 billion baht Windshell Naradhiwas — as well as the 3.9 billion baht luxury villa project in the seaside resort of Hua Hin, called MahaSamutr.

Pace, which is led by chief executive Sorapoj Techakraisri, also indicated that the proceeds from the sale would support high-end grocery chain Dean & Deluca, which the company purchased in 2014. Pace reported profits last year, for the first time since 2013.