Guide to Thai Property Funds.
Property Fund for Public Offering (PFPO) are property funds publicly traded/listed on the Stock Exchange of Thailand (SET).
With certain tax advantages, it is similar to a Real Estate Investment Trust (REIT) in other markets. However, as its regulatory framework was established as a recovery vehicle for distressed property assets as a result of the 1997 crash, the PFPO is less flexible than most overseas REIT regulations, which envisioned REIT’s as a mainstream investment vehicle.
The shortcomings of the Thai PFPO regulations are principally that no debt is allowed within the fund, and that the units, on the initial launch of the fund, must be distributed on a ‘small lots first’ basis, which hampers and so restricts its acquisition by institutions – the very investor group to which PFPO’s is most likely to appeal.
Here is so, yet another individual investor advantage one has on the SET. In this case it is likely high current income along with relative safety of capital, depending all a bit what fund one chooses.
Hence, here is the full guide, list, details and type of properties each fund invests in (click on the link to download the file):
Members know well which one is my own favorite Real Estate Fund on the SET -and it's units recently have quietly appreciated a few percentage poinst in value, no doubt because the market perceives it will soon become a much larger fund.
Also, property funds can be superior then bonds for fixed income, as these funds can expect to increase rents as time goes buy, so unlike bonds, yields to unit holders can increase as well.
Best Regards,
Paul A. Renaud.
PS. Property funds listed on the SET are sold as units, not shares, so foreigners investors to Thailand must not worry nor enter "NVDR" when buying/selling these. Some of these funds, pay out dividends quarterly so the true rate of return is higher then stated.
