Global REIT Proposed for Thai Development

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Thailand real estate owner/developer Mahboonyong Development Company, Ltd., plans to use a globally-focused REIT to raise approximately $150 million for a multi-use real estate development near the New Bangkok International Airport.

Thailand real estate owner/developer Mahboonyong Development Company, Ltd., plans to use a globally-focused REIT to raise approximately $150 million for a multi-use real estate development near the New Bangkok International Airport. Mahboonyong owns approximately 250 acres adjacent to the airport development, which is slated for completion in late September 2005. Upon completion, Thailand expects the airport to have the largest number of air travelers in Southeast Asia, and within five years, in all of Asia. Development plans by Mahboonyong include over 500 condominium residential units, a convention/exhibition center, shopping mall complex including entertainment and restaurants, two hotels, and four office buildings.

Michael Labertew, General Counsel for Southwest Strategic Partners, which is consulting with the Thai conglomerate, recently returned from a due diligence trip to review the project and its merit for structure as either a U.S. or Thai owned REIT. "With the recent passage of REIT regulations in several Asian countries, including Thailand, as well as the outstanding performance of US REITs and continued interest in promising foreign property developments, we feel very comfortable in recommending this project to institutional investors, once we can determine whether a U.S. or Thai-based REIT structure is more appropriate," said Labertew.

US REIT laws requires that REITs be formed within one of the 50 states, but allows ownership of foreign property, including raw land. Thailand laws do not allow Thai-based REITS to own raw land, and put ceilings on foreign ownership of real property. Labertew said that the use of an UPREIT (Umbrella Partnership Real Estate Investment Trust), or a similar strategy, should allow the REIT to be based in the US, with the intent of attracting direct US investment in the foreign development.

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Michael Labertew