LH still California dreaming
Developer to pay B1bn for apartments in US
The SET-listed property developer Land & Houses Plc (LH) is committed to continued investment in and out of the housing business, planning to spend 1 billion baht to acquire two apartment complexes in California and 2 billion baht on retail property in 2013.
The combined 3 billion baht will be part of a 10-billion-baht overall investment this year.
The remaining 7 billion will go to new land acquisition for future residential projects, said senior executive vice-president Adisorn Thananannarapool.
The additional investment of 1 billion baht in California will follow 300 million spent last year to buy a two-storey,45-unit apartment building in Sunnyvale, a city in Silicon Valley.
"The San Francisco Bay is a residential area near Silicon Valley, the largest region of the IT industry with headquarters of companies like HewlettPackard, Google, Apple and Facebook,"said Mr Adisorn.
Strong demand for rental apartments is driven by white-collar workers in the IT business who frequently change jobs.
The Sunnyvale building made instant rental income, as tenants were already there before LH bought the property.
Rental rates are between US$1,200 and $1,700 a month. An initial return of 15% is expected, and LH aims to hold the building for three or four years before liquidating.
"We focus on completed apartments for rent, as it is not easy to develop a property project from zero in the US,where city planning is strong," said Mr Adisorn.
LH's caretakers in America are a few Thai people who know the San Francisco Bay area well.
Overseas investment is not new for LH. It used to invest in the Philippines over a decade ago through Polar Property Holdings Corporation, now known as Starmalls, a listed firm on the Philippine stock exchange.
"We hold 9.59%, down from an earlier 25%, in this Filipino subsidiary since it underwent restructuring last year," said Mr Adisorn."But we won't invest in the Philippines in the next few years, as funding sources are difficult to find there."
LH plans a bond issue of between 6 billion and 7 billion baht in 2013 to refinance expired ones and invest in property business.
The company has three sources of income: the core housing development business, rental properties and invest-ment in subsidiaries.
In housing, LH had 70 existing projects at the end of 2012, 17 of which were in the provinces. Of the total,67%were single homes, 25% were condominiums and 8% were townhouses.
In rentals, LH has one retail property,the fully occupied Terminal 21. It has three serviced-apartment complexes at Terminal 21, on Ratchadamri Road and on Wireless Road with occupancy rates of 95%,70% and 75%.
The firm wants to put one or all of them into a property fund this year.
Subsidiaries include housing developer Quality Houses Plc, in which it holds 24.86%; retailer Home Product Center Plc (30.11%); lightweight concrete maker Quality Construction Products Plc (21.16%); and LH Bank (35.07%).
LH shares closed yesterday on the SET at 10.90 baht, unchanged, in heavy trade worth 1.13 billion baht.
LH wants to tap white-collar income in California's Silicon Valley, says Mr Adisorn.
16 January 2013