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LH sets up US subsidiary, plans investment in California

By on Aug 22, 2012 in Property News

Land & Houses is set to pour investment into the US property market, anticipating a recovery in real-estate prices.

This will be the company’s first overseas investment in 15 years, since it and many other Thai firms were hit hard by the financial crisis in 1997.

Senior vice president Adisorn Nanthanarapool said it was becoming clearer that the US property market had bottomed out after a long slump and recovery was now in sight.

“We are more interested in investing in property that generates rental income than in developing residential projects, focusing on hotels, retail, serv

iced apartments etc,” he said.

In an interview with The Nation after reporting to the Stock Exchange of Thailand late on Tuesday, Adisorn said LH had established a new com

pany, Land & Houses USA Inc, with registered capital of US$20 million (Bt620 million), in California. The new company is held 100 per cent by Land & Houses Plc.

“We cannot say how much we will invest in California – that will depend on the size of the asset. However, the first investment budget is $20 million. If the asset that we will buy has a value of more than $20 million, we will ask our board to increase the budget next time.”

He said LH had looked into investing in the United States since the property market slumped after the financial crisis in 2008, but at that time nobody knew when it would recover. But now the company believes that the market is showing signs of coming back.

Meanwhile, California has shown recovery signs with rising employment and higher consumer spending, and as a result the company decided to invest in that state.

He added that the company would need to see higher returns from its investment in the United States than from deposit interest rates or from domestic investments, as it has higher risk.

“We believe that our investment will start in the current second half of this year, and we are now in the negotiating process,” he said. However, he declined to disclose details about the asset.

He said the investment would aim to generate returns from both rental income and profit when the property market recovers and it sells out the project in the future.

Land & Houses invested overseas before the economic crisis in 1997, in Asean countries including Indonesia and the Philippines. But these ventures suffered losses after the baht was devalued that year. This is the first time since that experience that LH has invested overseas again.

Source : The Nation 16 August 2012

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