Method of Ownership

Dear Prospective Buyer,

Thank you for taking the time to consider investing in Horizon Residence.

This letter serves as an introduction to the fundamental legal structure of Horizon Residence and the legal interests that buyers will own to secure their assets. If you have any questions after reading through the following information, please feel free to contact us and we will be pleased to answer your questions.

Introduction to Property Ownership in Thailand

According to Thai law, foreign investors are generally not permitted to own land outright. However, foreign investors may acquire up to 49 percent of the private living space in a registered condominium project. The remaining 51 percent of the private living space of a condominium must be owned by Thai individuals or Thai companies, although foreign investors are permitted to acquire a registered lease over this 51 percent. In Thailand, the longest leasehold period for a residential unit is 30 years, although investors can acquire lease renewal options to take effect upon the expiry of the first 30 year term.

Horizon Residence

The Horizon Residence will be a luxury condominium project and therefore will offer foreign investors the opportunity to purchase freehold title for those able to acquire the first 49 percent of the private living space in the project.

For those foreign investors who are unable to acquire within the 49 percent foreign-freehold quota, the Horizon Residence offers a savvy alternate legal structure called the “secured leasehold structure”.

Under the “secured leasehold structure”, a portion of the condominium units falling in the 51 percent Thai quota will be held by a Thai company (as noted, a Thai company may own 51 percent or more of a condominium project). The foreign investors will acquire a registered lease over their respective condominium units, in addition to lease renewal options.

In order to secure the lease renewal options, the investors will acquire equity and voting rights in the Thai “Lessor” company and therefore the ability to vote to protect the lease renewal options. The combined force of a registered lease and equity in the Lessor company provides the next best alternative to freehold title. A more detailed description of the secured leasehold structure is shown below. We would be happy to answer any questions that you might have regarding the secured leasehold structure.

Diagram of Legal Structure of Secured Leasehold Structure

Method of Ownership
Note:
*The offshore company will hold 49 percent of the shares in the Thai Lessor company, which is the maximum foreign ownership permitted at law. The remaining shares will be held by the developer or related companies and investors. The shares held by the offshore company will be “Golden Shares” with special rights: before the Lessor can undertake any major decision, the positive vote of the foreign investors through the offshore company will be required, such major decisions including but not limited to the a) sale or encumbrance of the condominium and b) the decision to breach the lease renewal options.