SRT board approves renewal of Central Ladprao land lease for 30 years
The State Railway of Thailand's board has approved a new 30-year land lease agreement for Central Ladprao shopping mall, worth approximately 33 billion baht. The deal includes a private sector investment of 4.5 billion baht for renovations, with the property reverting to SRT after the contract ends.
The board of directors of the State Railway of Thailand (SRT) on Thursday approved a proposal for Central International Development to lease the land on which the Central Ladprao shopping mall is located for an additional 30 years, the acting SRT governor said.
Anan Phonnimdaeng, SRT acting governor, confirmed that the SRT Board meeting on Thursday approved the results of negotiations with Central International Development regarding the use of the shopping center area in the Phaholyothin Triangle (Central Ladprao).
The negotiations were conducted by SRT Asset Co., Ltd. (SRTA), a subsidiary of SRT that manages the land lease contracts.
As a result of the negotiations, a new 30-year land lease contract will be signed once the original contract expires, starting from December 19, 2028, to December 18, 2101, Anan said.
The proposed total compensation is approximately 33 billion baht, and the private sector will invest an additional 4.5 billion baht to renovate the existing buildings and infrastructure. After the contract ends, the property will revert to SRT.
"After the board's approval, we will proceed with finalizing the details and addressing any differing opinions. We expect to have all the necessary documents in order within the next two months, and the new contract should be signed by March," Anan said.
Anan also stated that the revenue SRT will receive from the lease agreement will be in the form of rental payments from SRTA over the 30-year period. SRT will not receive the entire amount upfront but will instead receive it as rent from the rights granted to SRTA for managing the property. In turn, SRTA will receive operational fees for subleasing the property, with the revenue SRTA must pay to SRT being the difference after deductions.
The new lease agreement calculates the Net Present Value (NPV) based on the current project base, resulting in a total value of approximately 33 billion baht over 30 years. In comparison, the original 20-year lease was worth about 20 billion baht. With the lease extension to 30 years, the value increases to around 33 billion baht, ensuring balance in relation to the extended time period.
