TALLEST SKYSCRAPER ACQUISITION
Another large property deal to emerge this year was the acquisition of MahaNakhon, Thailand’s tallest skyscraper, by a duty-free kingpin from a financially ailing property firm in a deal worth over 10 billion baht.
Pace Development Corporation, a SET-listed real estate firm, has sold 14 billion baht worth of assets, including a substantial part of MahaNakhon, to travel retailer King Power.
The deal was sealed by King Power MahaNakhon, a subsidiary of King Power, in April.
King Power is the country’s biggest duty-free retailer and owner of English Premier League football club Leicester City.
Pace said the portions of the 22-billion-baht MahaNakhon project it sold are land, the 155-room The Bangkok Edition hotel, an observation deck, MahaNakhon Cube retail building, sculptures, paintings, operating licences and related contracts worth a combined 12.6 billion baht.
It also sold land jointly owned by its subsidiaries worth 183 million baht.
The major part of the project not included in this deal is the 209-unit freehold condominium, the
Ritz-Carlton Residences Bangkok, which is more than 75% sold.
Known for its pixelated look, the MahaNakhon skyscraper saw its name change to “King Power MahaNakhon” in July after the deal was signed.
Pace launched MahaNakhon, a mixed-use project comprising super-luxury condominiums, a hotel and retail space, in 2010, with construction commencing in 2012.
Pace has been hamstrung by a series of financial problems, stemming from heavy investment in a short period.
In common with many property developers, Pace opted to use short-term debt instruments in the capital market to fund long-term investments. The practice, however, is viewed by some as a mismatch in terms of funding and repaying debt.
Pace chief executive Sorapoj Techakraisri said the company’s total debts will fall below 10 billion baht by the middle of 2019 from 15 billion at present after securing 14 billion from the sale of assets at MahaNakhon.
As of the end of 2017, Pace had a sales backlog of 38 units worth 3.2 billion baht at the tower, which are to be realised in 2018.
The company expects to be able to reduce its debts to a few billion baht by the end of 2019 with the completion of three projects next year. One of them is the 8- billion- baht Nimit Langsuan condo, which recorded 7 billion in presales.
The other two comprise MahaSamutr, a luxury villa project in Hua Hin worth 4 billion baht, and Windshell Naradhiwas, a high- end condo worth 3 billion on Narathiwat Ratchanakharin Road.
Pace registered a net loss of 1.1 billion baht in the third quarter of 2018, 15% larger yearon- year than the 961- million loss logged in the corresponding period of 2017, according to the company’s management, discussion and analysis ending Sept 30.
The company’s total asset value stood at 21.7 billion baht as of September, while total liabilities were logged at 20.3 billion.