Bangkok--26 May--TRIS Rating
TRIS Rating Co., Ltd. has affirmed the company rating of Central Pattana PLC (CPN) and the ratings of its current senior debentures (CPN066A, CPN093A, CPN10DA) at “A”. At the same time, TRIS Rating has assigned “A” ratings to CPN’s two proposed up to Bt1,500 million senior debentures. The rating outlook remains “stable”. The ratings reflect CPN’s leading position in the Thai retail property development industry, its proven record in managing shopping centers, and stable cash flow from the contract-based rental and service income from its high-quality shopping center portfolio. The ratings also take into consideration CPN’s aggressive expansion plans, which will require large capital expenditures during the next few years, and the slowdown in Thailand’s economic growth as a result of increasing oil prices and lower consumer confidence.
The “stable” outlook reflects CPN’s ability to maintain its market position in the retail property industry by developing new projects and acquiring existing projects. Despite the company’s significant capital expenditures during 2006-2009, the company is expected to continue its conservative financial policy by maintaining its target net debt to equity ratio at less than one time in the medium term.
TRIS Rating reported that CPN is the largest retail property developer in Thailand. Currently, the company operates 10 shopping centers located in Bangkok and other big cities of Thailand. Its total retail space of 617,300 square meters (sq.m.) means it is ranked number one. Its major shareholders are the Chirathivat family (35%) and Central Holding Co., Ltd. (27%), the retail leader in Thailand. The ownership link with the Central Group is seen as a benefit for the company since Central Department Store serves as a strong anchor for its shopping centers.
TRIS Rating said, CPN’s solid operating performance is attributable to strong occupancy rates and same store sales growth for its shopping centers. As of December 2005, the occupancy rate of its 10 shopping centers averaged at 93.1%, which reflects their good locations in attractive and high population growth catchment areas. The company’s growth strategy will require significant capital expenditures during the next few years. However, these plans will enable the company to maintain and improve its already strong market position. CPN has demonstrated its financial flexibility through the success of selling two shopping centers to a property fund in August 2005. The proceeds of Bt10,915 million were used to repay debt and finance new shopping centers. Consequently, the company’s total debt (including capitalized annual leases) to capitalization ratio improved from 60.2% in 2004 to 55.7% in 2005. The redevelopment risk of Central World Plaza is partly mitigated by its prime location on the most popular shopping street together with the company’s successful record of developing acquired projects.