Unitholders approve ฿5.3 billion sale of Bangkok’s Royal Orchid Sheraton

Investors in Grande Royal Orchid Hospitality Real Estate Investment Trust (GROREIT) have backed selling Bangkok’s Royal Orchid Sheraton Hotel to Orchid Hospitality for ฿5.3 billion. They rejected a lower repurchase offer from the original owner, Royal Orchid Hotel (Thailand) Plc.

Pote Harinasuta, chief executive of trust manager One Asset Management (ONEAM), said it plans to end the existing arrangement and sign a purchase agreement within two days. Orchid Hospitality would pay a ฿100 million deposit at signing, followed by ฿5.2 billion within 14 days, or by Nov 11.

The offer is above the hotel’s latest valuation of ฿5.2 billion. Orchid Hospitality is managed by property investor Suchad Chiaranussati and owns nearby hotels, including the Millennium Hilton Bangkok. Pote said its knowledge of the property and financial readiness supported the proposed timetable.

After completion, GROREIT plans to settle ฿1.35 billion in borrowing from Government Savings Bank before returning the balance to investors. The trust estimates distributions could reach ฿12 per unit, comprising about ฿10 in capital and ฿2 in gains. ONEAM aims to finish repayment and liquidation by the end of November, subject to procedures and approvals.

If negotiations break down or Orchid Hospitality cannot fulfil the conditions, the trust will seek another buyer through an open auction. Pote said that process was expected to take about six months.

The transaction also faces an unresolved legal dispute. GROREIT sued Royal Orchid Hotel on Oct 21, alleging lease breaches and failure to return the premises. The company has also sued GROREIT and ONEAM, although ONEAM said it had not received the claim.

ONEAM and trustee MFC Asset Management say the original owner’s buyback entitlement has lapsed; Royal Orchid Hotel contests that position. The proposed transaction is expected to proceed unless the court orders an asset freeze or other interim measure.