TRIS Rating Affirms Current Company & Issue Ratings, and Assigns New Issue Rating of “CPN” at “A+/Stable”

TRIS Rating has affirmed the company rating of Central Pattana PLC (CPN) and the ratings of its existing debentures at “A+”. At the same time, TRIS Rating has assigned the rating of “A+” to CPN’s proposed issue of up to Bt1,200 million in senior debentures. The outlook remains “stable”. The ratings reflect CPN’s leading position in the retail property development market, 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 expansion plans and the slowdown in the Thai economy.

The “stable” outlook reflects CPN’s ability to maintain its solid position in the retail property development industry. With three-year contracts with tenants, high occupancy rates in existing shopping centers, and a conservative financial policy, the company should be able to withstand the current slowdown in consumer spending and overall economy.

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. Currently, CPN operates 14 shopping centers, with total retail space of 915,394 square meters (sq.m.), in Bangkok and major cities of Thailand. The retail space operated by CPN expanded at an average of 5.8% per annum for the past five years, while the total supply of retail space in Greater Bangkok grew by an average of 4.9% per annum. CPN has long been the market leader in the retail property market in Thailand, with 24% market share in 2008 as measured by total retail space. The openings of three new shopping centers, the acquisition of the Charoensri Complex, and the 20-year renewal of the sub-lease agreement for the CentralPlaza Ladprao have strengthened CPN’s leading position in the industry.

TRIS Rating said that the solid operating performance of CPN is attributable to high occupancy rates and healthy same store sales growth for CPN’s shopping centers. The occupancy rate of the 10 shopping centers averaged 94.4% per annum for the past five years. Despite the current slowdown in overall economy, each of its new shopping centers achieved high occupancy rate since its inception. As of March 2009, the average occupancy rate improved to 96.7%, better than the industry average of 92.9%. For the first three months of 2009, the company’s same store sales increased by 6% compared with the first three months of 2008, while its rental and service income grew by 23% to Bt.2,451 million, due mainly to the openings of two new shopping centers, CentralPlaza Chaengwattana and CentralFestival Pattaya Beach.

In 2009, capital expenditures of CPN will be approximately Bt7,000 million, including the acquisition of the Charoensri Complex project in April. During 2010-2012, the development plans will require Bt5,000-Bt7,500 million in capital expenditures annually. The company plans to fund these expansion projects using a combination of cash flow from operations and new borrowings. As of March 2009, total debt increased to Bt18,505 million and the total debt to capitalization ratio rose to 53.98%. Leverage is expected to improve, if the company will be able to sell some shopping centers to the property fund.

The retail sales index reported by the Bank of Thailand has continuously declined since the first quarter of 2008. The index fell by 10.8% year-on-year (y-o-y) in the first quarter of 2009, closely tracking the 7.1% slide in gross domestic product (GDP) for the same period. The consumer confidence index also decreased, falling from 80.7 in March 2008 to 71.5 in May 2009. Further deteriorations in overall economy and private consumption remain rating concerns for CPN, said TRIS Rating. -- End

Company Rating: Affirmed at A+ Issue Ratings: CPN10DA: Bt1,500 million senior debentures due 2010 Affirmed at A+ CPN119A: Bt1,500 million senior debentures due 2011 Affirmed at A+ CPN126A: Bt3,000 million senior debentures due 2012 Affirmed at A+ CPN135A: Bt2,000 million senior debentures due 2013 Affirmed at A+ CPN145A: Bt1,000 million senior debentures due 2014 Affirmed at A+ Up to Bt1,200 million senior debentures due within 2013 A+ Rating Outlook: Stable Copyright 2009, 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 upon such information.

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