Central Pattana to use CPNCG funds to expand investment

Central Pattana will use the money raised from CPNCG to expand its investment for both this year and next. The funds will also help reduce the company’s financial costs and lower its debt-to-equity ratio to below the current level of 1:1, president and CEO Kobchai Chirathivat said yesterday.
Central Pattana previously announced an investment plan for 2012 and 2013 worth Bt25.3 billion.
Kobchai said CPNCG would generate a return from leasehold rental at The Offices @ Central World, which has an occupancy rate of 96 per cent of office space totalling 74,605 square metres.
The project generated rental income of Bt600 million last year, up 14 per cent from the previous 12 months.
It is expected to enjoy average annual growth in rental income of 10 per cent.
Meanwhile, Central Pattana plans to hold 25 per cent in CPNCG, with the remaining 75 per cent available for sale to the public.
SCB Asset Management president Jotika Savanananda said the demand for buying into property funds was strong, as such funds can generate returns for investors averaging as much as 22 per cent a year.
According to data on returns on investment last year, price growth for property funds came in at between 16 per cent and 17 per cent, followed by returns of 7 per cent to 8 per cent from dividend payments.
“At times when the stock market faces an unpredictable situation, investors decide to invest in secure assets, especially property funds, which generate stable returns,” she said.
An application will be made to the Securities and Exchange Commission to launch CPNCG on the market during the final week of August and the first week of September at a target price of Bt10 per unit, she said.
Investors will be able to apply for a minimum of 5,000 units from Siam Commercial Bank and Maybank KinEng Securities (Thailand).
Jotika said that after the launch of CPNCG and the transfer of The Offices @ Central World leasehold to the fund, Central Pattana would continue to manage the asset, and would receive a management fee from the fund. The fee will depend on the financial results of the building.
“We believe this offers potential for investors because office space in the central business district is now limited, and the Office @ Central World is sited in the best location in the CBD,” she added.