CPNREIT invests in department stores as the largest investment asset in Thailand with confidence of high returns

Stocks and Financial Services Press Releases Thursday December 14, 2017 16:07
Bangkok--14 Dec--MT Multimedia

'CPN REIT Management' ("REIT Manager") introduces CPNREIT with department stores as the main investment asset. It is the largest investment asset in Thailand after the conversion of CPNRF and being listed on the stock market, drawing investment attraction. The transferred assets and the additional investment assets are located at prime locations with outstanding performance. Central Pattana Pcl. ("CPN") is ready to support CPNREIT's additional investments of potential assets in the future.

Ms. Wallaya Chirathivat, Director of CPN REIT Management Co., Ltd., as the CPNREIT founder and manager disclosed that CPNREIT mainly invested in department stores and had became the largest investment asset in Thailand after the conversion of CPNRF and the transfer of CPNRF assets, together with additional investments in the assets, namely, CentralFestival Pattaya Beach project and Hilton Pattaya, totaling 11,908 million baht by obtaining loans from financial institutions. With CPNREIT's being listed on the SET, it is believed that the trust is an interesting investment choice for investors who want to invest in the property through the purchase of REIT for good and constant returns in the long run.

CPN REIT Management owns personnel with the expertise of department stores and hotel investment management. On the other hand, the CPNREIT has appointed Central Pattana Pcl. (CPN), with the proficiency of department store management, as the asset manager of CPNREIT's department stores. 'CPN Pattaya Hotel', a subsidiary of which 99.99% of shares held by CPN, is assigned as the sub-lessee of Hilton Pattaya. CPN Pattaya Hotel still appoints Hilton Group to manage the hotel in order to maintain continuous outstanding performance. The REIT manager and financial advisor have referred to the returns of unit trusts from hypothesis financial statements assessment with the expected CPNREIT's first year yield of 9.05% during January 1 – December 31, 2018, calculated from CPNRF's unit trust price at 18.5 baht per unit (as of August 15, 2016)

"CPNREIT has a policy to mainly invest in department stores of CPN which is ready to provide support of additional quality asset investments. In the future, CPNREIT has a plan to invest in additional assets from CPN in order to increase its size, leading to trading liquidity and investment attraction of CPNREIT. The additional investments of the assets in the future depend on time appropriation," said Ms. Wallaya.

Mr. Preecha Ekkunagul, President and Chief Executive Officer of Central Pattana Pcl. (CPN), as the owner of the assets which CPNREIT received from the transfer of CPNRF and additional investment assets, and the manager of CPNREIT's department stores said that the assets transferred from CPNRF consisted of CentralPlaza Rama 2, CentralPlaza Rama3, CentralPlaza PinKlao, and CentralPlaza Chiang Mai Airport which had outstanding performances. The additional asset investments were performed through the investment of the 20-year leasehold right (ending August 30, 2037) in the following assets: (1) CentralFestival Pattaya Beach Project with the occupancy rate as of December 31, 2016 and June 30, 2017 as high as 98.45% and 97.37%, respectively; (2) Hilton Pattaya Hotel with the occupancy rate in 2016 and the first six-month period of 2017 at 89.13% and 91.60%, respectively and the average room rate in 2016 and the first six-month period of 2017 at 5,586 baht per night and 6,487 baht per night, respectively. The performance of the assets was in line with the business plan. CPN has expected that the retail business and the hotel and tourism business would grow with the economic expansion which benefited the demand of the rental areas within the department stores and the occupancy rate of the hotels.

CPN determines to provide support to CPNREIT's additional asset investments in CPN's potential department stores in Bangkok and provinces with good performances for further fundraising of business operation and investment expansion. CPN also places the importance on fundraising through the REIT as a good fundraising channel of the capital market.

Mr. Suthipat Serirat, First Executive Vice President, Head of Investment Banking and Capital Markets, The Siam Commercial Bank Pcl., as the financial advisor disclose that CPNREIT had potential and outstanding performance with the confidence to provide good returns to the investors. The conversion of CPNRF to CPNREIT was the change to international management which led to capability of additional asset investments and investment loans from financial institutions in order to increase the size of CPNREIT's asset, resulting in unit trust's investment attraction, trading liquidity, and asset allocation with variation of locations. In addition, the unitholders have the opportunity to receive additional returns from the investments of additional assets.

Mr. Montree Sornpaisarn, Chief Executive Officer of Maybank Kim Eng Securities (Thailand) Pcl., as the financial advisor, said that after CPNREIT's additional asset investments, the debt to total asset ratio was at approximate of 33.8% which led to the opportunity of the investors to receive benefit from the appropriate management of the capital structure of CPNREIT. The capital structure was performed through the loan which provided gearing benefit i.e. having less financial cost than the cost of fund. CPNREIT received more loan benefits when compared with property fund and this led to more returns for the unitholders.

"As the financial advisor, I am confident with the proficiency of CPNREIT due to its additional investments in department stores or hotels of Central Group with appropriate capital structure, leading to its investment attraction among local and oversea institutional investors and individual investors who will hold more units to receive constant returns.

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