Destination Capital (DC) signed an agreement with KTB Securities Thailand (KTBST) and MFC Asset Management to launch the DESCAP 1 private equity trust, which will acquire hotels in Thailand.
The trust is targeting investor returns of up to 15% per year with a 5-7 year holding period.
James Kaplan, chief executive of DC, said the company will source, acquire, reposition and asset manage hotels acquired by DESCAP 1, with KTBST acting as trust settlor and trust manager, while MFC is a trustee under the Securities and Exchange Commission (SEC) regulated structure.
From left Mr Natthapong, Mr Kaplan, and Thotsaporn Pornvattanasirikul, REIT Trustee department director for MFC Asset Management are in charge of DESCAP 1.
The investment strategy is to acquire urban and resort hotels and then renovate, reposition and rebrand to increase the value of properties to generate returns for investors.
The trust will leverage Destination Group’s experience in Thailand with buying, managing and selling distressed hotels.
“We are pleased to play such an important role to support the rejuvenation of the travel and tourism industry with the announcement of the DESCAP 1 private equity trust,” Mr Kaplan said.
“This trust will invest in strategic hospitality assets to facilitate re-employment and hotel re-openings to re-launch Thailand as a preferred global travel destination. This could not have been done without the support of KTBST and MFC.”
He said DESCAP 1 will give investors the opportunity to participate in the rebound of the Thai hotel and resort industry.
The pandemic has seen foreign tourist arrivals collapse from almost 40 million in 2019 to an estimated 7 million this year, mostly from January to March.
The trust will acquire freehold hotels and resorts located in prime destinations such as Bangkok, Pattaya, Hua Hin and Phuket, as these locations are expected to see the fastest rebound.
Natthapong Na Ranong, chief executive of KTBST, said the fundraising for DESCAP 1 has two target investor groups: institutional investors and high net worth individuals who are interested in the recovery of the hotel industry.
KTBST will raise funds and act as trust manager to support the initiative.
The trust units are subject to SEC regulation and will be available to both foreign and domestic investors for subscription this month, with a target trust capitalisation of 2.5 billion baht.
The trust has a five-year investment period extendable subject to market conditions by two years.
KTBST has received inquiries about DESCAP 1 from fund management and securities firms to act as selling agents.
“Under the collaboration with KTBST as trust manager, MFC as trustee and DC as the asset manager, DESCAP 1 will facilitate a needed financial boost for the hotel industry and serve as an alternative asset class within investor portfolios,” Mr Natthapong said.
“I believe this is an opportunity for investors keen on the tourism industry that offers a degree of flexibility with full accountability.”
Mr Natthapong said.