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Skytrain operator turns developer (Bangkok Post)

Operator to invest B10bn in three hotels. Bangkok Mass Transit System Plc (BTSC) is entering the property business to strengthen itself and prepare for possible uncertainties after its skytrain concession expires in the next 20 years.The five-star Langham Place Phayathai, targeting tourists and business travellers, is among three hotels that BTSC plans to build to help ensure its future after the end of its skytrain concession. The Four Points by Sheraton is under construction on Sathon Road, adjacent to the BTS Surasak station. The Langham Sukhumvit Bangkok will be built near Nana station.The BTS Skytrain operator plans to develop three hotels with combined investments of 10 billion baht.Company executive chairman and CEO Keeree Kanjanapas said BTSC should have its own assets and businesses that generate long-term income. The property business is the right answer because he has a lot of experience in the industry from his time with Tanayong, now under his son Kavin’s management, he said.”It’s a good time to enter the property business because the investment cost is very cheap compared to levels during boom periods,” Mr Keeree said. “Actually, I’m not worried about the economic crisis because the Thai economy has the potential to grow by itself if politics does not obstruct growth.”

Among the three hotels are The Four Points by Sheraton, which is now under construction on Sathon Road, adjacent to the Surasak BTS station. The 437-room hotel is scheduled for completion by 2011 and will be managed by Starwood Hotels & Resorts Worldwide. In addition, two new five-star hotels will be constructed at the Nana and Phayathai stations. The Nana property will be named The Langham Sukhumvit Bangkok and the other will be Langham Place Phayathai, targeting tourists and business travellers. The two hotels will be the first properties for UK-based Langham International in Bangkok. Mr Keeree said the company selected the three brands because they would offer new experiences. “To me, an outstanding hotel like The Mandarin Oriental Hotel Bangkok is a classic. I hope our hotels will be the same,” he said. BTSC will also develop some residential projects. The company set a budget of 7.5 billion baht to develop its land bank including a 15-rai plot near Mor Chit and another behind the Tesco Lotus Lat Phrao on Phahon Yothin Road. Details are not finalised yet.

This year, the company expects to increase its revenues by 10% from 2.2 billion baht last year, mainly due to the rise of BTS passengers to between 390,000 and 400,000 people per day. The figure of one-day-ticket users is increasing significantly as well. The first-quarter performance in its 2009 fiscal year starting from April 1 has been 10% higher than expected. BTSC will pay its first-ever dividend at 80 satang per share by the end of this month. The company also plans to issue debentures to raise 12 billion baht. Part of the sum will be spent on repaying debts worth about 9 billion baht and the rest will be reserved as cashflow. Subscriptions will be from Aug 17-20. The debentures will be issued in five lots with maturities from three to seven years. The interest rate will be 4.75% the first three years and rise by 0.5% yearly afterwards and be paid every three months. The total principal will be repaid on the date of the bullet payment. Bangkok Bank and Standard Chartered Bank are the underwriters. BTSC also plans to seek a listing on the Stock Exchange of Thailand (SET) in the last quarter of this year. It will float 25% of registered capital worth about 4.8 billion baht to the public. The money will be mainly used to fund future railway extensions. The hotel and residential business will depend mostly on bank loans and the internal rate of return (IRR) from the hotels should be around 20%.

Joe Miller
the authorJoe Miller
I have been living in Thailand for over 20 years and witnessed the many changes the country has undergone since the Asian Financial Crisis. I have spent time in Phuket, Samui, Hua Hin, and Chiang Mai, but I gravitate back to Bangkok when all is said and done. It is here that I spent years running a software development company and teaching at universities. These days I live on the Internet with Bangkok as my base. I never stopped believing in the enormous potential of Thailand's kingdom, which is why I joined the ThaiVest Team.

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