The other day the cabinet came out with a ruling that:

  • Approved the waiver of value added tax, specific business tax & stamp duty for transferring assets from property funds into REITs.
  • Approved the waiver of income tax for unit-holders of property funds that are converted into REIT

So what?

  • This should pave the way for conversion from property funds into REITs as major transaction costs have been cleared, as Thai property funds can no longer increase capital unless they convert into REITs.
  • The conversion will help extend the lives of the property funds especially those with leasehold assets.
  • The REITs will be able to gear up more at maximum of 60% of total asset value (REITs with investment grade rating) or 35% of total assets for those REITS without investment grade rating, vs 10% of NAV for property funds
  • Yields could increase anywhere from 10-60% for each new conversion to a REIT in the market.

Who could this be good for? Well the usual suspects, CPN, WHA, HEMRAJ, TICON, and any other type company that has property assets that generate a yield, I’m still waiting for the day that hospitals here will do REITS

  1. Hi Khun Pon, if the prospect is for higher REIT yields, doesn’t that imply that currently listed REITS and income funds may be overpriced? Bualuang just recommended JASIF, to yield 8%. I never buy on their research. Don.

  2. Hi Pon.

    I own WHAPF and was in the process of adding more shares today until I read your comments regarding REITS. Does this imply that WHA will/can convert other funds in their group like WHAPF into their REIT fund or will it continue to operate as a property fund?

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