News Detail

Date/Time
24 Jun 2021 17:22:00
Headline
Notification of resolutions of the Investment Committee on the acceptance of extension of lease proposal, and Record Date for determining the right of unitholders for attending the Extraordinary General Meeting of Unitholders No. 1/2021
Symbol
M-PAT
Source
M-PAT
Full Detailed News
Download Full Detailed News
                Schedule of investment unitholders' meeting/trust unitholders' meeting

Subject                                  : Schedule of investment unitholders' 
meeting
Meeting Type                             : Extra General Meeting
Date announced                           : 24-Jun-2021
Meeting date of unitholders              : 10-Aug-2021
Beginning time of meeting (h:mm)         : 10 : 00
Record date for the right to attend the  : 08-Jul-2021
meeting
Ex-meeting date                          : 07-Jul-2021
Significant agenda item                  :
  - Agenda 1        To acknowledge information of the 2021 Annual General Meeting of 
Unitholders of MFC Patong Heritage Property Fund (M-PAT);
Agenda 2    To consider and approve the extension of lease proposal for Patong 
Heritage Hotel Project; and
Agenda 3        To consider other matters (If any).
Venue of the meeting                     : at MFC Asset Management Plc. Office, 
Room 2306-2307, 23rd Floor, Column Tower, Ratchadapisek Road, Klongtoey, Bangkok
 10110
Remark                                   :
                                24 June 2021

To:    The President
    The Stock Exchange of Thailand

Ref. MFC PT 47/2021 Notification of resolutions of the Investment Committee on 
the acceptance of extension of lease proposal for Patong Heritage Hotel Project,
and notification of Record Date for determining the right of unitholders for
attending the Extraordinary General Meeting of Unitholders No. 1/2021 of MFC
Patong Heritage Property Fund (M-PAT)

    MFC Asset Management Public Company Limited ("the Management Company"), as the 
Management Company of MFC Patong Heritage Property Fund (M-PAT) ("the Fund"),
hereby notify that the Investment Committee No. 15/2021 held on 24 June 2021 has
 passed the resolution as follows:

1.    Resolved to propose to the unitholder's meeting to consider and approve the 
extension of lease proposal for Patong Heritage Hotel Project
Fact and Rationale
The Fund invested in freehold right of land and building which consists of 183 
units of condominium for the purpose of running a hotel business. The Fund has
leased out all the Fund's asset to the hotel operator named Patong Heritage
Company Limited ("Patong Heritage Company" or the "Lessee") to operate the hotel
under the name of "Patong Heritage Hotel" ("Patong Heritage Hotel") under the
lease agreement dated 11 June 2014 ("the Lease Agreement No.1"). The
Extraordinary Meeting of Unitholders no. 1/2019 which was held on 23 July 2019
resolved to ratify the extension of lease agreement for not more than 3 months
and approve the acceptance of the lease proposal from Patong Heritage Company
under lease agreement for 1 year commencing from 1 September 2019 to 31 August
2020 with the fixed rental of 12 million baht and the variable rental scheme of
70% of net profit from hotel operating ("the Lease Agreement No.2").
The Extraordinary Meeting of Unitholders no. 1/2020 resolved to approve the 
acceptance of the new lease proposal from Patong Heritage Company for 1 year
under lease agreement dated 1 September 2020, commencing from 1 September 2020
to 31 August 2021, with the variable rental scheme of 70 % of net profit from
hotel operation ("the Lease Agreement No.3" or "Existing Lease Agreement). The
Existing Lease Agreement will expire on 31 August 2021.
The Management Company has considered finding a new lessee together with 
negotiation with Patong Heritage Company, the current lessee, as well as finding
opportunity to sell assets through various channel such as real estate brokers
who are juristic persons and individuals including contacting with hotel
operators directly. Since the outbreak of coronavirus disease (COVID-19) has
rapidly and continuously spread in both in Thailand and aboard, this occurrence
severely affects tourism industry especially hotel business, causing hotel
occupancy rates to drop and resulting in decline in room rate. The uncertainty
of this circumstance has affected the opportunity to seek the new lessee and
also has an impact on the condition of type of rental and the rate.
The Management Company received a proposal dated 20 May 2021 from Patong 
Heritage Company requesting to extend the Existing Lease Agreement which has
details and conditions for consideration as follows:

Items    Conditions of the Lease Agreement
Lessee    Patong Heritage Co., Ltd.
Extension of Lease term    Extension for 2 years (24 Months), commencing from 1st 
September 2021 to 31st August 2023
Rental fee during extension period    1. The fixed rental fee of 300,000 baht per 
year, which shall be equally paid monthly (Exclusive of VAT)
2. The variable rental fees depending on the operating performance at the rate 
of 70% of the net profit from the hotel operating performance, provided that
-    Monthly net profit from hotel operations means total monthly revenue deducted 
by total monthly expenses and monthly common area maintenance fee of condominium
 juristic persons.
-    Total monthly revenue means the total revenue of the month from hotel 
operations of the total hotel rooms of 164 units of the Fund, which include
revenue from food, beverages, and other revenue related to hotel operations.
-    Total monthly expenses mean all expenses incurred from hotel management of the
total hotel rooms of 164 units of the Fund per month plus fixed rent, tax fee
and insurance fee.
-    Monthly common area maintenance fee of condominium juristic persons means the 
juristic person's common expenses for common areas of the Fund totaling 7,550.85
square meters multiplied by the common fees per square meter, which is
calculated monthly.
 The calculation is according to the formula as follows:

Conditions for calculation of variable rental fees    -    In the case the hotel does 
not operate for a full month, the monthly variable rental fees shall be
calculated based on the actual performance depending on the ratio of the number
of days of hotel operations to the total number of calendar days of such month.
-    In the case of monthly operating losses, the Lessee shall pay excess expenses 
in advance and add them to the operating performance of the following month to
calculate the variable rental fees of the following months. After it covers the
excess expenses, the variable rental fees shall be calculated. When the variable
rental fees is paid, it is deemed that the previous excess expenses is settled
in that month and the fees shall be recalculated.
-    The variable rental fee shall be calculated based on the monthly operating 
performance under the Existing Lease Agreement dated 1st September 2020
(commencing from 1st September 2020 to 31st August 2021) until the Extension of
Lease Term ends on 31st August 2023.
-    If the Lease Agreement is terminated under the condition of termination or 
expired by any reason whatsoever and the hotel has accumulated deficit or excess
 expenses, the Lessee shall be responsible for all excess costs
Rental payment    1.    The Lessee agrees to pay monthly fixed rental fees within the 
5th of the following month.
2.    The Lessee agrees to pay monthly variable rental fees according to the 
conditions of calculation of the variable rental fees within the 25th of the
following month.

Rental Deposit    None
Condition of termination     The Fund and the Lessee can terminate the Lease 
Agreement by giving a three-month advance notice to the other party provided
that the Fund and the Lessee shall not terminate the Lease Agreement within 12
months commencing from the beginning of extension period except mutually agreed.
Opinion of the Management Company
The Management Company views that the proposal for the extension of the lease 
agreement as proposed by Patong Heritage Company is appropriate given the
present crisis of COVID-19 pandemic situation and the Unitholders should approve
such lease extension proposal of Patong Heritage Company, with the following
reasons:
-    Since the outbreak of COVID-19 in March 2020, the Management Company has tried
to seek new lessee or/and negotiate with the Lessee for the solution to protect
the benefits of the Fund and the unitholders. Due to the COVID-19 pandemic
throughout the world and Thailand, it caused a material effect on the tourism
industry particularly the hotel business situated in tourist attraction in the
south of Thailand i.e., Phuket province. As a result, most of hotels were
officially and temporarily closed and some have not opened until present.
-    Tourism is a key contributor to the Phuket economy and the main driver behind 
the hotel market. International tourist contributes around 89.6% of total
tourism revenue of Phuket. The COVID-19 pandemic greatly affected the Phuket
tourism revenue has dropped by 75.51 % in 2020 given that there were the easing
of lockdown and the government programs encouraging domestic travel in the
second half of 2020. According to Airport of Thailand, there were a total of
2.59 million passenger arrivals at Phuket International Airport during crisis of
COVID-19 pandemic in 2020, a decrease of 71.44 % from the previous year as
Thailand has still been closed for international tourism and travel restrictions
had not been lifted.  The international passenger arrivals at Phuket
International Airport represent of 41.25 % or 1.07 million passengers, a
significant decrease of 80%. While domestic passenger arrivals at Phuket
International Airport represent of 58.75% or 1.52 million passengers, also
decrease by 59.28 from the previous year. It is viewed that it needs at least
another 2 years to recover to normal situation prior of COVID-19 pandemic.
-    Patong Heritage Hotel has been severely affected from the decreasing of 
tourism by room cancellation as the majority of the hotel's customers are
international tourists. There are several measurements that were issued such as
the Thai government issued the quarantine measure and travel restriction, the
announcement of Phuket State to temporarily close hotels and resorts in Phuket
on 2 April 2020, the decrease in flights of airlines, the closure of Phuket
International Airport and the closure of Patong area on 4 April 2020. Although,
later on, the Community of Communicable Disease of Phuket Province issued and
announcement to relax hotels to operate their business, Patong Heritage hotel
has resumed its operation until present. Since COVID-19 pandemic still exists in
foreign countries and in Thailand, Thai Government still maintains the measure
of travel restriction to control the pandemic. As a result, foreign tourists
cannot travel to Thailand effected severely to hotel operation and performance
since hotel's customers are international tourists around 97%
-    The occupancy rate of Patong Heritage Hotel during 2014 to 2018 were at 
68-75%. It decreased to 62% in 2019 causing by policy to crackdown zero-dollar
tour package and capsizing of tourist boat. Since COVID-19 pandemic in 2020,
occupancy rate of the hotel dropped to 14% from the huge decrease of foreign
tourists particularly Chinese tourists, the main tourist group of the hotel
(decreased from average rate of 50% to 6% in 2020). This impacts the hotel
performance to record loss from operation and has accumulate loss from operation
 during 1 September 2020 to 31 March 2021 at 5.2 million baht
-    The Fund may receive less rental fees or there may be only the fixed rental 
received with no variable rental fees at certain time due to fluctuations in
future tourism from COVID-19 pandemic. In addition, upon the conditions for
calculation of variable rental fees which will include accumulate loss from
hotel operation since 1 September 2020 onwards, there may be the risk that the
Fund will not receive variable rental fee throughout this extension lease period
and thus results in the Fund being unable to pay dividend to unitholder. With
the COVID-19 pandemic situation, it is difficult to seek the new lessee. The
extension lease proposal is as beneficial as it is feasible in business
operation under the current circumstance, which will cause the hotel operation
not to be interrupted and to continuously generate income. Patong Heritage
Company, as the Lessee, still has the duty to maintain and repair the assets to
be in good condition throughout the lease term, at the expenses of the Hotel, to
 be usable for business operation at all time.
-    This extension lease proposal is suitable for the short-term situation in the 
next 1-2 year which is expected that the outbreak of COVID-19 may unravel and
the tourism market situation will recover and resume to normal. However, the
Fund and the Lessee have the right to terminate the Lease Agreement, prior to
the expiration, after twelve-months of this extension period which provides the
Fund to secure the procurement of benefits continuously at least 12 months as it
is difficult to seek new lessee in the short run. In the meantime, the fixed
rental received by 300,000 baht per year will alleviate the burden of Fund's
expenses. In additional, the Fund still maintain hotel license under Patong
Heritage Co.,Ltd.
If there are other prospect lease proposal submitted to the Management Company 
prior to the date of Extraordinary General Meeting of Unitholders No. 1/2021,
the Management Company will disclose necessary information via the Electronic
Listed Company Information Disclosure (ELCID) of the Stock Exchange of Thailand.
In the case the Management Company receives the prospect lease proposal prior
to the submission of invitation letters to unitholders, the Management Company
will disclose necessary information in the invitation letters together with
supported information for consideration to unitholders and the Stock Exchange of
 Thailand.
Potential effects on unitholders from the approval of the lease proposal
(1)    The Fund still can continuously obtain benefits from its assets at least 12 
months. This will not affect the hotel business operation that may be
interrupted in the case where the Fund has to find a new lessee, which have a
risk and uncertainty of the period in finding a new lessee. Moreover, the fixed
rental of 300,000 baht per year will alleviate the burden Fund's expenses.
(2)    The Fund may receive less rental fee or there may be only the fixed rental 
received with no variable rental fees at certain times or all times during this
extension lease period due to fluctuations in future tourism industry from the
ongoing impact from the outbreak of COVID-19.  In addition, the Fund may not
receive variable rental fee throughout the extension lease period from hotel
performance upon the conditions of variable rental fees calculate provide that
the hotel currently records continuing accumulate loss from hotel operation
since 1 September 2020. Currently, the accumulate loss from hotel operation as
of March 2021 was at 5.2 million baht. This may affect the decrease in the NAV
of the Fund and the Fund may have no return to unitholders until the end of
lease agreement.
(3)    Assets of the Fund will be maintained or repaired to be in good condition 
with the Lessee's expenses, so there will not be additional expenses on the
Fund.
(4)    Procurement of benefits under the extension of lease agreement may affect 
the decrease in the NAV of the Fund. The Fund shall assess the value of real
estate under procurement of benefits according to the Fund's revenue structure
after the extension lease agreement is executed. The fair value of the assets
will decrease causing the Fund to have unrealized loss from decrease in fair
value of investment, which increase the accumulated loss of the Funds. Based on
the Appraisal Report by Knight Frank Charter (Thailand) Co., Ltd dated 1
September 2020, the Investment Asset of the Fund has a fair value of 616 million
 baht according to Income Approach.
(5)    The Fund may not be able to declare dividend payment to unitholders in the 
accounting period which the Fund has recorded deficit or retained loss. The Fund
 may be unable to make capital reduction due to lack of excess liquidity.
Potential effects on unitholders from the disapproval of the lease proposal
(1)    The procurement of benefits from the assets of the Fund will be interrupted.
The Fund will not receive rental fees until it is able to find a new lessee.
During such period, the uncertainty will affect the cash flow of the Fund and
may affect a decrease in net asset value to extend that it may not be able to
pay dividends to unitholders.
(2)    The Fund shall assess the value of real estate under no procurement of 
benefits according to the Fund's revenue structure. The fair value of the assets
will decrease causing the Fund to have unrealized loss from decrease in fair
value of investment, which increase the accumulated loss of the Funds resulting
no dividend payment to unitholders.
(3)    Assets of the Fund will not be maintained or repaired to be in good 
condition, which impact on the Fund's image and potential in procurement of
benefits from the assets of the Fund or affect the sale value in case there is
purchase proposal to the Fund. Furthermore, the expenses of maintenance or
repaired will belong to the Fund.
(4)    In case the unitholders voting is resolved not to accept the new lease 
proposal. There is a high uncertainty whether the Fund will find a new lessee
who are able to provide better proposal, considering that under the situation of
COVID-19 outbreak. This affects significantly a decrease in net asset value of
the Fund from no procurement of the benefits from the assets.
(5)    If the Fund cannot find a new lessee, the Fund may be forced to sell its 
assets and dissolve, which the forced sale value may not reflect the actual
price of the assets.
Resolution of the Investment Committee
    Resolved to propose to the unitholders to consider and approve the acceptance 
of the extension of lease proposal for Patong Heritage Hotel Project and
authorized the Fund to conduct the following:
(1)    To negotiate, prepare, and execute a lease agreement and/or other agreement 
and/or any related document and to do any other necessary acts as related the
aforementioned actions in accordance to Unitholder's approval.
(2)    In case further negotiation caused the Lease Agreement to be changed or 
modified from the original proposal, which is not a significant change or
modification, the Fund will proceed to ensure the benefit of unitholders under
the Lease Agreement.
(3)    To seek alternative lease agreement that benefits the Funds and then propose
 to the unitholders for further approval.
(4)    To consider alternative proposals or options of sales of asset for the best 
benefit of unitholders. If there are other alternatives or proposals of sales of
asset, the Management Company will propose to the unitholders for further
approval.
Voting Requirement:
This agenda requires the approval from the Unitholders' Meeting with majority 
votes of the unitholders attending the meeting and having the right to vote,
whereby a unitholder who has a special interest in this matter shall have no
right to vote

2.    Resolved to call the Extraordinary General Meeting of Unitholders No. 1/2021 
of MFC Patong Heritage Property Fund (M-PAT)
Resolved to approve to schedule the Extraordinary General Meeting of Unitholders
No. 1/2021 on 10th August 2021, at 10.00 a.m., at MFC Asset Management Plc.
Office, Room 2306-2307, 23rd Floor, Column Tower, Ratchadapisek Road, Klongtoey,
 Bangkok 10110, for consideration and approval of the following agenda:
Agenda 1        To acknowledge information of the 2021 Annual General Meeting of 
Unitholders of MFC Patong Heritage Property Fund (M-PAT);
Agenda 2    To consider and approve the extension of lease proposal for Patong 
Heritage Hotel Project; and
Agenda 3        To consider other matters (If any).
The Management Company hereby notify the date to determining the list of 
Unitholders entitled to attend the Extraordinary General Meeting of Unitholders
No. 1/2021 on 8th July 2021
The Management Company will submit invitation letters to the Extraordinary 
General Meeting of Unitholders No. 1/2021 together with supporting information
for consideration to unitholders and the Stock Exchange of Thailand not less
than 14 days in advance prior to the date of such Extraordinary General Meeting
of Unitholders.
In order to constitute a quorum of such Extraordinary General Meeting of 
Unitholders, there shall be unitholders attending the meeting of not less than
25 persons, or one-half of the total number of unitholders, holding not less
than 1/3 of the total number of units sold.
For the convention of the Extraordinary General Meeting of Unitholders, the 
Management Company will provide the guidelines for the meeting's attendees to
prevent the outbreak of COVID-19 with details as appeared in invitation letter
of the Extraordinary General Meeting of Unitholders No. 1/2021.
Please be informed accordingly.
       
  Yours Faithfully,

                     (Ms. Natree Panassutrakorn)
                Executive Vice President    
______________________________________________________________________
This announcement was prepared and disseminated by listed company or issuer 
through the electronic system which is provided for the purpose of dissemination
of the information and related documents of listed company or issuer to the
Stock Exchange of Thailand only.  The Stock Exchange of Thailand has   no
responsibility for the correctness and completeness of any statements, figures,
reports or opinions contained in this announcement, and has no liability for any
losses and damages in any cases.  In case you have any inquiries or
clarification regarding this announcement, please directly contact listed
company or issuer who made this announcement.