It is apparent that the Covid-19 pandemic has had a tremendous impact on every business sector. Above all, the hospitality industry has taken the hardest hit, as tourism is its primary source of revenue. Due to a lack of financial liquidity and growing expenditure, it is not an overstatement to predict that real estate owners in the hospitality sector would be compelled to sell their operating assets potentially at an unfavorable price in order to survive during this challenging time.
On February 1, 2021, Thailand's Securities and Exchange Commission (the "SEC") announced a new regulation regarding real estate investment trusts (the "REIT") with buy-back conditions, which are distinct from typical REITs. The ultimate goal is to help real estate investors improve their financial condition by selling their assets to REITs. The structure of REITs with buy-back conditions will allow real estate owners to repurchase their assets within a defined period of time and at a predetermined price.
On June 11, 2021, the Capital Market Supervisory Board issued the Announcement of the Capital Market Supervisory Board TorJor. 47/2564 re: Issuance and Offers for Sale regarding Units of REITs (No. 22), which came into effect on July 1, 2021 (the “Regulation”), defining two types of REITs with buy-back conditions for offering to (1) General Investors or (2) Institutional Investors or Ultra-High Net Worth Investors.
According to the Regulation, buy-back conditions can be agreed upon between REITs and real estate owners, including a defined date and price for the asset's buyback.
The key similarities and differences between these two types of REITs with buy-back conditions may be seen in the table below: