Univentures Plc (UV) was founded in 1980 as a manufacturer and distributor of zinc oxide and listed on the SET in 1988. Over the years it has evolved and today it is a holding company specialising mainly in property and related businesses. Director Worawat Srisa-an discusses the company's strategy and outlook.
Please explain UV's holding structure.
UV is a holding company that invests through subsidiaries or joint-venture companies. The business groups are 90% in real estate, including residential and commercial and property services, and other businesses such as zinc oxide, parking systems and energy saving. Our aim is to balance and diversify our portfolio; we hold 100% of Grand Unity Development which focuses on high-rise real estate, and 39.28% in Golden Land Plc which focuses on low-rise projects. We also own, directly or indirectly, the Sathorn Square and Park Ventures commercial office assets.
Please explain the business strategies of each of UV's real estate segments.
With Grand Unity we focus on real market demand with our three main offerings priced from 50,000 to 90,000 baht per square metre and target customers typically aged 25-35 years old. It has Condo U developments, typically eight-storey buildings located just off main roads; U Delight high-rise developments in more prime locations, near existing and future mass-transit developments; and U Delight Residences in premium locations such as on Rama III overlooking the Chao Phraya River.
Worawat: Growth and profitability balance
For these three offerings we aim to create value in terms of functionality of the site, rooms and layout, ensuring efficient design for a community of like-minded residents. We are the only developer that does not require air-conditioning in lobbies because we maximise the airflow within the compound, allowing us to invest in other value-added amenities such as fitness rooms, libraries and common space, offering residents lower common fees.
When we first acquired Golden Land, its product offerings were purely low- to mid-market single detached houses and townhouses. In 2014, Golden Land acquired Krungthep Land (KLand) to expand its low-rise offerings to the premium segment. The price range is now between 2 million and 25 million baht depending on the project and the unit. Typically these projects are farther from the city centre as they require more land; however they are near main throughways and expressways.
The commercial assets, Sathorn Square and FYI Center, are both owned by Golden Land while Park Ventures Ecoplex is directly owned by UV. We focus on premium locations, with Park Ventures earning the highest rent per square metre in Bangkok, and the only office building to have received the LEED Platinum award.
UV plans to launch its Golden Ventures Leasehold REIT (GVREIT) this quarter. Which assets will be sold into the REIT? What are UV's plans for the additional capital?
The GVREIT will provide a new platform for growth. We aim to place both Park Ventures and Sathorn Square into the REIT for a combined size of 10 billion baht. GVREIT itself will be managed by Univentures REIT Management (UVRM) which will allow us to expand our property and asset management business into a consolidated platform. With the capital raised we expect to reduce some leverage on our balance sheet and use the additional capital for expansion in current and future projects.
What differentiates UV from its competitors?
The main differentiating factor is that we have a well-balanced and diversified portfolio with a recurring income component. This allows us to expand throughout all three segments and maintain a balance between growth and profitability that allows us to weather the natural cycles that occur in the real estate industry.
What are your views on the real estate industry in Thailand?
Real estate is location- and value-driven and we have begun to see some "red oceans" within the Bangkok market. However, with Golden Land we continue to see strong support in the low and mid-tier segments, while the luxury end of the market is still strong. But what is interesting is the gentrification of the city itself. For instance, FYI Center was 60% pre-leased before opening. Ten or 20 years ago it would not have been possible to imagine a Grade A office building at the Rama IV junction; thus with the expansion of mass-transit lines connecting different parts of the city, new and different opportunities present themselves.
What are the biggest risks facing your business?
The main risk is securing the land to develop additional projects. As land banking is not part of our strategy, even if we have an opportunity to purchase land within the next two or three years we will pass on it.
Where do you see UV five years from now?
Our aim is to continue to grow. Over the past few years, our average revenue growth has been 30%, and was above 40% in 2014 and 2015. Based on our internal projections, we expect to be one of the top real estate companies in Thailand. We want to sustain our growth path because as a holding company we have to continually support existing and new businesses as well as potential mergers and acquisitions.
The Executive Q&A Series is presented by ShareInvestor, Asia's leading financial internet media and technology company and the largest investor relations network in the region. The interview was conducted by Pon Van Compernolle. For more information, e-mail pon@rossvancompernolle.com or supat@shareinvestor.com. Website: www.ShareInvestorThailand.com