TRIS Rating Co., Ltd. has affirmed the company rating of Central Pattana PLC (CPN) and the ratings of CPN’s existing debentures at “A+” with “stable” outlook. The ratings reflect CPN’s leading position in the Thai retail property development industry, its proven record in managing high-quality shopping centers, reliable cash flow from contract-based rental and service income, and conservative financial policy. The ratings also take into consideration CPN’s aggressive expansion plans, the renewal risk for the CentralPlaza Ladprao, and the slowdown in Thailand’s economic growth as a result of an uncertain political situation and higher inflation.
CPN’s “stable” outlook reflects its ability to maintain its market position in the retail property industry by developing new projects and acquiring existing shopping centers. Despite substantial capital expenditures planned for 2008-2010, the company is expected to continue its conservative financial policy by maintaining the target net debt to equity ratio at less than one times in the medium term.
TRIS Rating reported that CPN is the largest retail property developer in Thailand. Its major shareholders are the Chirathivat family (32%) and Central Holding Co., Ltd. (27%), the leading retailer in Thailand. The ownership link with the Central Group is seen as a benefit since Central Department Store has been a strong anchor for shopping centers owned by CPN. From 2003, CPN’s retail space expanded at an average of 6.9% per annum, while the total supply of retail space in the Bangkok Metropolitan Area (BMA) grew by an average of 4.2% per annum. Currently, CPN operates 10 shopping centers in Bangkok and other big cities in Thailand. With total retail space of 697,034 square meters (sq.m.), CPN holds the number one rank, with 23% market share, down from 28% in the previous year. The market share is expected to recover after two new shopping centers, CentralPlaza Chaengwattana and CentralFestival Pattaya Beach, open in late 2008 and early 2009, respectively.
TRIS Rating said, CPN’s solid operating performance is attributable to high occupancy rates and healthy same store sales growth for its shopping centers. The occupancy rate of the 10 shopping centers averaged 94.4% for the past five years and 95.7% at the end of March 2008. The rise is mainly the result of the improved occupancy rates at CentralWorld, CentralPlaza Ram Indra, and CentraPlaza Rattanathibet, after renovations were completed. Same store sales growth increased from 13% in 2006 to 14% in 2007. The revenue contribution from office building rentals grew sharply from 3.8% of total revenue in 2004 to 9.5% in the first three months of 2008, after the opening of the offices@CentralWorld and office tower B at CentralPlaza Pinklao.
CPN’s conservative financial policies are evidenced by the discipline in keeping the net debt to equity ratio below one. The company’s growth strategy will require Bt6,000-Bt10,000 million in annual capital expenditures during 2008-2010. With its plan to lease or sublease approximately Bt10,000 million in property assets to the property fund, the level of leverage is expected to be maintained as planned. Four new shopping centers, scheduled to be completed by 2009, will partly mitigate the contract renewal risk of the CentralPlaza Ladprao land lease agreement with the State Railway of Thailand (SRT).
The current high inflation rate, driven up by high oil prices, has lowered consumer confidence and spending. The consumer confidence index slightly improved to 80.7 in March 2008, but slumped to 78 in June 2008, the same level as at the end of 2007, said TRIS Rating. -- End
Central Pattana PLC (CPN)
Company Rating: Affirmed at A+
Issue Ratings:
CPN093A: Bt1,000 million senior debentures due 2009 Affirmed at A+
CPN096A: Bt1,000 million senior debentures due 2009 Affirmed at A+
CPN096B: Bt500 million senior debentures due 2009 Affirmed at A+
CPN10DA: Bt1,500 million senior debentures due 2010 Affirmed at A+
CPN126A: Bt3,000 million senior debentures due 2012 Affirmed at A+
Rating Outlook: Stable
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Copyright 2008, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance
CPN’s “stable” outlook reflects its ability to maintain its market position in the retail property industry by developing new projects and acquiring existing shopping centers. Despite substantial capital expenditures planned for 2008-2010, the company is expected to continue its conservative financial policy by maintaining the target net debt to equity ratio at less than one times in the medium term.
TRIS Rating reported that CPN is the largest retail property developer in Thailand. Its major shareholders are the Chirathivat family (32%) and Central Holding Co., Ltd. (27%), the leading retailer in Thailand. The ownership link with the Central Group is seen as a benefit since Central Department Store has been a strong anchor for shopping centers owned by CPN. From 2003, CPN’s retail space expanded at an average of 6.9% per annum, while the total supply of retail space in the Bangkok Metropolitan Area (BMA) grew by an average of 4.2% per annum. Currently, CPN operates 10 shopping centers in Bangkok and other big cities in Thailand. With total retail space of 697,034 square meters (sq.m.), CPN holds the number one rank, with 23% market share, down from 28% in the previous year. The market share is expected to recover after two new shopping centers, CentralPlaza Chaengwattana and CentralFestival Pattaya Beach, open in late 2008 and early 2009, respectively.
TRIS Rating said, CPN’s solid operating performance is attributable to high occupancy rates and healthy same store sales growth for its shopping centers. The occupancy rate of the 10 shopping centers averaged 94.4% for the past five years and 95.7% at the end of March 2008. The rise is mainly the result of the improved occupancy rates at CentralWorld, CentralPlaza Ram Indra, and CentraPlaza Rattanathibet, after renovations were completed. Same store sales growth increased from 13% in 2006 to 14% in 2007. The revenue contribution from office building rentals grew sharply from 3.8% of total revenue in 2004 to 9.5% in the first three months of 2008, after the opening of the offices@CentralWorld and office tower B at CentralPlaza Pinklao.
CPN’s conservative financial policies are evidenced by the discipline in keeping the net debt to equity ratio below one. The company’s growth strategy will require Bt6,000-Bt10,000 million in annual capital expenditures during 2008-2010. With its plan to lease or sublease approximately Bt10,000 million in property assets to the property fund, the level of leverage is expected to be maintained as planned. Four new shopping centers, scheduled to be completed by 2009, will partly mitigate the contract renewal risk of the CentralPlaza Ladprao land lease agreement with the State Railway of Thailand (SRT).
The current high inflation rate, driven up by high oil prices, has lowered consumer confidence and spending. The consumer confidence index slightly improved to 80.7 in March 2008, but slumped to 78 in June 2008, the same level as at the end of 2007, said TRIS Rating. -- End
Central Pattana PLC (CPN)
Company Rating: Affirmed at A+
Issue Ratings:
CPN093A: Bt1,000 million senior debentures due 2009 Affirmed at A+
CPN096A: Bt1,000 million senior debentures due 2009 Affirmed at A+
CPN096B: Bt500 million senior debentures due 2009 Affirmed at A+
CPN10DA: Bt1,500 million senior debentures due 2010 Affirmed at A+
CPN126A: Bt3,000 million senior debentures due 2012 Affirmed at A+
Rating Outlook: Stable
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Copyright 2008, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance