TRIS Rating Co., Ltd. has affirmed the company rating of Central Pattana PLC (CPN) and the rating of its Bt1,000 million senior debentures (CPN066A) at "A-". The ratings reflect CPN's leading position in shopping center industry in Thailand, its recurring cash flow from contract-based rental and service income, and its good track record of operating high-quality shopping centers. The ratings also take into consideration the redevelopment risk of its largest mixed-use complex, Central World Plaza, formerly called the World Trade Center, and intensified competition in the retail industry.
TRIS Rating reported that CPN was incorporated in 1980 under the name "Central Plaza Co., Ltd." to invest in a mixed-use complex in Bangkok. The company currently develops, operates, and manages nine shopping centers, three office buildings, three residential condominiums, seven food centers, and provides services within its shopping centers. CPN is the market leader in the shopping center development industry and its management team is experienced and well recognized in the industry. As of September 2003, its total rentable space of 529,061 square meters (sq.m.) is more than double the second largest player. The Chirathivat family from the Central Group currently holds 62% of CPN's shares. In July 2003, CPN successfully sold convertible preferred shares to the Thailand Equity Fund, making the fund the holder of 8.2% of the total number of shares.
TRIS Rating said, in September 2003, rental and service income from CPN's shopping centers accounted for 84.8% of total revenue, while food center operations and office buildings and residential condominiums contributed 6.3% and 4.3% respectively. In addition to the diversification of its shopping centers by location, CPN's diversified customer base is a positive factor for the ratings. Rental and service income from the largest tenant was around 7% of total rental and service income, and the top 10 tenants contributed roughly 20% of total rental and service income. By continuously adding new shopping centers, CPN has reduced its dependence on the performance of Central Plaza Ladprao, currently its biggest income contributor. The overall occupancy rate in September 2003 averaged 94.2%, slightly improved from 93.9% in December 2002, and continuously better than the industry average of 93.9% in September 2003. To stimulate consumer traffic, management uses magnet attractions, such as Central Department Stores, cinemas, bowling alleys, supermarkets, brand name shops, and large multipurpose halls.
Rental and service income grew 48.5% during the first nine months of 2003 from the same period in 2002 mainly due to the successful openings of Central Plaza Rama II and Central Airport Plaza Chiangmai Phase 2B and the acquisition of Central World Plaza. Operating income before depreciation and amortization as a percentage of rental and service income and sales decreased from 54.5% in 2001 to 52.1% in 2002 and to 50.3% in the first nine months of 2003 because of land rental fee for Central World Plaza and compensation paid to the State Railway of Thailand. However, the ratio is expected to improve after the renovation and development of Central World Plaza, its biggest total rentable area center, and the center begins to fully generate income. CPN's total debt (including capitalized annual leases) to capitalization ratio increased from 56% in 2001 to 64.5% in 2002 and 61.3% in September 2003 following the acquisition of Central World Plaza and investments in new projects. However, management is expected to continue its prior financial policy by maintaining its target net debt to equity ratio of less than one time. Although the Bt9,000 million investment in Central World Plaza has recently added more leverage to the company, this acquisition is regarded as a good strategy for maintaining its leading position in shopping center industry. The redevelopment risk of Central World Plaza is mitigated by its prime location on the most popular shopping street together with the company's successful record of developing acquired projects.
The recovering economy, the growth of private consumption, and low interest rates have been positive for the retail industry by increasing consumer spending. The government plan to develop Rama I Road and Sukhumvit Road as shopping streets also supports retail shopping centers. New zoning regulations, which will limit the new supply of large scale retail centers, will benefit existing developers. However, Siam Paragon, a new luxury shopping complex with total rentable area of around 210,000 sq.m. and Central World Plaza are both expected to be completed in 2005, increasing competition in the industry, TRIS Rating said.-- End
Central Pattana PLCCompany Rating: Affirmed at A-Issue Rating: CPN066A: Bt1,000 million senior debentures due 2006 Affirmed at A-
TRIS Rating reported that CPN was incorporated in 1980 under the name "Central Plaza Co., Ltd." to invest in a mixed-use complex in Bangkok. The company currently develops, operates, and manages nine shopping centers, three office buildings, three residential condominiums, seven food centers, and provides services within its shopping centers. CPN is the market leader in the shopping center development industry and its management team is experienced and well recognized in the industry. As of September 2003, its total rentable space of 529,061 square meters (sq.m.) is more than double the second largest player. The Chirathivat family from the Central Group currently holds 62% of CPN's shares. In July 2003, CPN successfully sold convertible preferred shares to the Thailand Equity Fund, making the fund the holder of 8.2% of the total number of shares.
TRIS Rating said, in September 2003, rental and service income from CPN's shopping centers accounted for 84.8% of total revenue, while food center operations and office buildings and residential condominiums contributed 6.3% and 4.3% respectively. In addition to the diversification of its shopping centers by location, CPN's diversified customer base is a positive factor for the ratings. Rental and service income from the largest tenant was around 7% of total rental and service income, and the top 10 tenants contributed roughly 20% of total rental and service income. By continuously adding new shopping centers, CPN has reduced its dependence on the performance of Central Plaza Ladprao, currently its biggest income contributor. The overall occupancy rate in September 2003 averaged 94.2%, slightly improved from 93.9% in December 2002, and continuously better than the industry average of 93.9% in September 2003. To stimulate consumer traffic, management uses magnet attractions, such as Central Department Stores, cinemas, bowling alleys, supermarkets, brand name shops, and large multipurpose halls.
Rental and service income grew 48.5% during the first nine months of 2003 from the same period in 2002 mainly due to the successful openings of Central Plaza Rama II and Central Airport Plaza Chiangmai Phase 2B and the acquisition of Central World Plaza. Operating income before depreciation and amortization as a percentage of rental and service income and sales decreased from 54.5% in 2001 to 52.1% in 2002 and to 50.3% in the first nine months of 2003 because of land rental fee for Central World Plaza and compensation paid to the State Railway of Thailand. However, the ratio is expected to improve after the renovation and development of Central World Plaza, its biggest total rentable area center, and the center begins to fully generate income. CPN's total debt (including capitalized annual leases) to capitalization ratio increased from 56% in 2001 to 64.5% in 2002 and 61.3% in September 2003 following the acquisition of Central World Plaza and investments in new projects. However, management is expected to continue its prior financial policy by maintaining its target net debt to equity ratio of less than one time. Although the Bt9,000 million investment in Central World Plaza has recently added more leverage to the company, this acquisition is regarded as a good strategy for maintaining its leading position in shopping center industry. The redevelopment risk of Central World Plaza is mitigated by its prime location on the most popular shopping street together with the company's successful record of developing acquired projects.
The recovering economy, the growth of private consumption, and low interest rates have been positive for the retail industry by increasing consumer spending. The government plan to develop Rama I Road and Sukhumvit Road as shopping streets also supports retail shopping centers. New zoning regulations, which will limit the new supply of large scale retail centers, will benefit existing developers. However, Siam Paragon, a new luxury shopping complex with total rentable area of around 210,000 sq.m. and Central World Plaza are both expected to be completed in 2005, increasing competition in the industry, TRIS Rating said.-- End
Central Pattana PLCCompany Rating: Affirmed at A-Issue Rating: CPN066A: Bt1,000 million senior debentures due 2006 Affirmed at A-