Thailand’s Ticon Industrial Connection Plc (TICON) plans to convert three of its property funds into the country’s largest real estate investment trust (REIT) with total combined asset of 32 billion baht ($964 million).

The three property funds are Ticon Property Fund, Ticon Park Logistics Fund and Ticon Industrial Growth Fund. The merger comes amidst  the Securities and Exchange Commission regulation that disallows property funds from raising further capital in a move seen to promote REITS.

TICON unveiled plans to convert three property funds – TFUND, TLOGIS, TGROWTH into TREIT by fixing a swap ratio at rate of 1 investment units of funds to 0.9874 / 1.0129 / 0.8673 trust units of TREIT, accompanied by a cash of 1.6977 / 1.7415 / 1.4911 baht per unit respectively. Therefore, the funds/trust unitholders’ meeting will be held during 18-19 October.

The group is confident that the move will surely bolster unitholders’ benefits from the conversion. After a successful merger, TREIT will further invest at least Bt3.5 billion in TICON assets, which will drive a huge asset size to reach Bt35 billion, making TREIT become the largest industrial trust in Thailand.

TICON will hold a meeting of unit holders voting on October 18-19 for voting on the proposal. If the plan secures approvals, TICON will appoint BBL Asset Management as the trustee for the TREIT (TICON REIT) and complete the conversion this year.

“If the merger is successful, TREIT will further acquire additional assets particularly ready-made factories and warehouses worth at least 3.5 billion baht, which will drive its asset size to over 35 billion baht,” said chief executive officer Virapan Pulges.

The three property funds have a combined rental space of 1.5 million square m, covering 22 locations in seven provinces in Thailand. It has made a joint venture with Indonesia’s PT Surya Semesta Internusa Tbk and Japan’s Mitsui & Co for building factories and warehouses with 100,000 square m earmarked in Indonesia.

“Following the conversion, TREIT’s strengths are attributed to its strong diversified asset base to grow future business on the basis of selected strategic locations, lease terms, and the number of lessees. The broadly diversified portfolio of real estate investment will provide a balanced revenue stream from a wide spectrum of sources and varied categories of lessees. TREIT will have factories and warehouses in 22 locations, spreading over seven major provinces with high economic growth. There will be a total number of 492 units totaling 1,489,860 square meters with 69% freehold and 31% leasehold. Warehouses account for 192 units of 739,125 square-meter space and factories, 300 units of 750,735 square meters. With the additional assets from TICON, TREIT will become the largest REIT in Thailand.” explained Mr. Peerapat.

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