"Noble's Boards gives a green light to monetize investment in 2 projects "Nue District R9 - Nue Cross Khu Khot Station" which are expected to seal the deals this July
The Board of Directors of Noble Development Plc ("NOBLE") had a resolution to monetize the company's investment in two joint-venture projects of Nue District R9 and Nue Cross Khu Khot Station to Proud Real Estate Plc ("PROUD") for the value of THB 867.57 million based on a 50% stake each held by NOBLE and TNL Alliance Co.,Ltd. ("TNLA", a joint-venture between BTS Group and Saha Pathanapibul Group). The sales transactions are expected to be finalized by the end of July this year, depending on the approval of Proud Real Estate Plc's shareholders to increase common shares to accommodate the investment.
Mr. Thongchai Busarapan, Vice Chairman and Co-CEO of Noble Development Plc or "NOBLE", a leading real estate developer in prime area of Bangkok and peripheral districts, revealed that the Board Meeting on May 26th, 2023 approved the company to sell all its common shares held in two joint-venture companies including (1) Rama 9 Alliance Co., Ltd ("PA9"), the developer of Nue District R9 and (2) Khu Khot Station Alliance Co.,Ltd. ("KK"), the developer of Nue Cross Khu Khot Station. Together with the investment sale is the transfer of the company's right to claim portions of the loans owed to the company to Proud Real Estate Plc ("PROUD") worth THB 867.57 million equivalent to a 50% stake held by NOBLE.
"In line with the company's strategy, the company sold the investment in the two projects to maximize Return on Equity (ROE) & Internal Rate of Return (IRR) by shortening the holding period and realizing reasonable profits. The two projects have achieved great success in pre-sales, Nue Cross Khu Khot Station was sold out while Nue District R9 has pre-sales more than 83%. Moreover, the sale value of these 2 projects will add the value both in terms of the profit recognition and cash flow including management fees as the project manager. Therefore, the company believes that this is the appropriate time to monetize the two projects as it would gain cash flow to redeploy on new projects that earn a better yield as well as improving the company's capital structure. At the same time, the sales of projects will adjust the joint venture project's portfolio in order to increase new joint venture projects in the future. Currently, the company has 9 joint-venture projects with TNL Alliance Co., Ltd ("TNLA") worth THB 28,400 million.
Moreover, Noble still performs the project management role, including the name of the projects and construction according to the existing obligations stipulated in sale and purchase agreement with customers, as well as after-sales services and construction warranty to ensure there is no impact to customers.
The process to sell investment and transfer shares in PA9 and KK, including portions of shareholders' loan, will occur after both parties have completely fulfilled the conditions precedent in the share purchase agreement which is expected to be finalized by the end of July 2023, resulting in extra profit recognized during the 3rd quarter of this year.