Unitholders of the Grande Royal Orchid Hospitality Real Estate Investment Trust have approved the sale of the 726-room Royal Orchid Sheraton Hotel in Bangkok to a company managed by property investor Suchad Chiaranussati for 5.3 billion baht, passing over a lower buyback offer from the property’s original owner, Royal Orchid Hotel (Thailand) Plc.
One Asset Management, serving as the trust manager, plans to sign a sale and purchase agreement with Orchid Hospitality within two days. Under the terms outlined by chief executive Pote Harinasuta at a Wednesday briefing in Bangkok, the buyer will place a 100-million-baht deposit upon signing and settle the remaining 5.2 billion baht by November 11. If negotiations stall or the buyer fails to meet the strict 14-day payment window, the trust will pivot to an open auction.
Weighing the Financial Returns Against Appraised Values
The 5.3-billion-baht transaction price edges past the property’s latest appraised value of 5.2 billion baht. For unitholders, the deal is projected to yield an internal rate of return of nearly 9%, surpassing the original target of 8%.
Once the sale crosses the finish line, Grande Royal Orchid Hospitality Real Estate Investment Trust intends to clear a 1.35 billion baht debt owed to the Government Savings Bank. The lender has granted a six-month loan extension through January, contingent on a strict hold on distributions until the liability is completely settled. Remaining capital from the sale is slated for distribution to unitholders at an estimated 10 baht per unit in returned capital, supplemented by a 2-baht-per-unit gain, totaling 12 baht per unit.
One Asset Management aims to wrap up the debt repayment and liquidation process by the end of November. Choosing a direct sale over an open auction helps bypass months of pricing uncertainty. While more than 20 major investors, including hotel operators and large banking clients, have expressed interest in the asset, an auction would likely introduce complications regarding existing liabilities and contractual conditions.
Navigating Legal Hurdles Along the Chao Phraya River
The path to finalizing the sale runs parallel to a growing stack of legal filings. Grande Royal Orchid Hospitality Real Estate Investment Trust filed a lawsuit against Royal Orchid Hotel (Thailand) Plc on October 21, citing lease agreement breaches and a failure to return the hotel premises. Meanwhile, the original owner has filed its own legal action against the trust and One Asset Management, though the latter said it had not yet received the statement of claim.
The history of the riverside property stretches back to 1978 when it was developed by Italian-Thai Development, later passing to Royal Orchid Hotel (Thailand) Plc in 1985. The trust subsequently acquired the hotel for 4.5 billion baht in 2021. The purchase agreement included a mandatory provision requiring the original owner to repurchase the land, buildings, and related assets by the conclusion of the fifth lease year on July 14, 2026, for 4.87 billion baht, excluding value-added tax.
When Royal Orchid Hotel missed that deadline, the trust initiated legal steps to enforce the contract and secure a new buyer. Because the original owner has not yet vacated the property, the trust has asked the South Bangkok Civil Court for an eviction order, damages, and interim relief. This includes a request to compel the occupant to deposit 25 million baht per month—matching the former rental rate—while the dispute winds through the courts. Unless an interim asset-freezing order interrupts the proceedings, the 5.3 billion baht sale remains on track to move forward.
