Tesco launches float of its Thailand property fund to raise up to £369m
TESCO, the world’s third-largest retailer, launched the initial public offering of its Thailand property fund yesterday, aiming to raise up to £369m to finance future expansion.
The offering is part of a trend among retailers in recent years to squeeze more value from their real estate assets, bundling them into a property fund, selling the fund to investors and leasing back the property.
The Tesco Lotus Retail Growth Freehold and Leasehold Property Fund, as it is formally called, comprises 17 shopping malls anchored by a Tesco Lotus hypermarket in cities including Bangkok and tourist destinations such as Krabi.
The fund “is well positioned to capitalise on the steady growth of the Thai economy, the strength of the retail sector and increasing wealth and consumption across the country,” Tesco Lotus chief executive Chris Bush said in a statement.
The property fund, similar to a real estate investment trust, or REIT, will offer shares at a price range of 9.65-10.40 baht (20p-21p) each, valuing the total deal at up to 18bn baht (£369.1m), Tesco’s Ek-Chai Distribution System unit said in a statement. At that price, the fund would have a yield of 6.5 to seven per cent per year.
That yield would compare with 8.14 per cent for both the CPN Retail Growth Leasehold Property Fund, which owns three malls and an office tower, and movie theater owner Major Cineplex Lifestyle Leasehold Property Fund, according to figures from the Asia Pacific Real Estate Association.