Mr Somkiat Ruentongdee, Executive Vice President, CP Land Public Company Limited, a prestigious property firm with 25 years of experience in development and management of property projects in Bangkok and elsewhere in Thailand, revealed his firm’s plan to make this November an initial public offerring of investment units in “C.P. Tower Growth Leasehold Property Fund”, or CPTGF, which will invest in 30-year leasehold interests in landed property and office/shopping centre buildings in three CBD locations, namely, CP Tower I (Silom), CP Tower II (Fortune Town) and CP Tower III (Phayathai), with a total value of nearly THB 10 billion.
“C.P. Tower Growth Leasehold Property Fund” will be a property fund that invests in both office building and shopping centre projects, allowing shared customer bases and offering great investment diversification to the investors. With a size of about THB 10 billion, the fund will be Thailand’s largest property fund that invests in both office buildings and shopping centres. Its establishment is currently pending approval by the Office of the Securities Exchange Commission.
Mrs Chavinda Hanratanakool, Senior Executive and Vice President, Property Fund & Private Fund Management, Krung Thai Asset Management Public Company Limited, or KTAM, the manager of “C.P. Tower Growth Leasehold Property Fund”, said that the fund will invest in 30-year leasehold interests in landed property, office buildings and shopping centres with an aggregate lease space of 131,915 sq.m. in Silom, Ratchadaphisek-Phra Ram 9 and Phayathai. The strategic locations of the assets offer considerable conveniene in transportation, including direct access to the BTS, MRT and Airport Rail Link train networks, and will contribute greatly to future income stability and growth as well as satisfactory dividend yields.
“A unique strength of CPTGF will lie in the facts that the office building tenants will also be patrons of the shopping centres, which will ensure constant revenue, and that the shopping centres, which house food vendors, banks and retail stores, will in turn please the existing office building tenants and help attract new ones. The rental revenue from the office buildings and that from the shopping centres will be boosted by each other. This makes us confident in the fund’s prospects and revenue growths”, noted her.
Mr Werapong Suppasedsak , Executive Vice President-Director, Krung Thai Bank Public Company Limited, the fund’s underwriter, highlighted the outstanding past performances of the assets, especially (i) the 100% occupancy rate over the past three years (coupled with the right to increase office rent rates by 10% every three contract years) of CP Tower I (Silom), an office building located in Bangkok’s core business district, (ii) the more than 97% historical occupancy rate of both office building and shopping centre segments of CP Tower II, a lifestyle/IT mall building with offices on the higher floors and located on Ratchadaphisek Road, Bangkok’s new ‘Fifth Avenue’, and (iii) the continuing performance growth and current occupancy rate of 100% of both office building and shopping centre areas of CP Tower III, opened in 2009 and located in Phayathai, another important corner of Bangkok’s core business district with a skywalk leading to the BTS and Airport Rail Link stations.
Mr Wirach Morakotkarn, Acting Chief Executive Officer, KTB Advisory Company Limited, as a Financial Advisor, commented that the leasehold interest in the landed property and office/shopping centre building of CP Tower II (Fortune Town) will be the fund’s most valuable asset, representing 56% of its total asset value, followed by the leasehold interest in the landed property and office/shopping centre buildings of CP Tower I (Silom) (34%) and CP Tower III (Phayathai) (10%), respectively. While CP Tower III (Phayathai) has undergone renovation during 2011-12 and CP Tower II (Fortune Town) in 2009-11, CP Tower I (Silom) is also planned to be refurbished in due course, he added. Meanwhile, after launching the fund, CP Land, which has more than 25 years of experience in property management, will remain manager of the property. Therefore, he is confident that the property will continue to be maintained and managed professionally and will generate growths in rental revenue as well as satisfactory returns for investors in “C.P. Tower Growth Leasehold Property Fund”.
Mr Sittichai Mahaguna, Executive Vice President, CIMB Thai Bank Public Company Limited, another Financial Advisor, noted that several institutional investors have shown interest in “C.P. Tower Growth Leasehold Property Fund”, due to their confidence in CP Land’s expertise in office building and shopping centre management as well as the geographically diversified nature of the fund’s assets and its adequate size which will lead to good liquidity in the secondary market. In addition, he said, property fund is a great alternative investment that is very suitable for the current investment climate: (i) it gives regular returns at on average satisfactory rates (especially when compared to the commercial banks’ deposit rates); (ii) considering the fact that rental increase rate is naturally higher than the inflation rate, it offers an inflation protection in the present low-interest environment; and (iii) it generally is less riskier than common stock.
“We believe that C.P. Tower Growth Leasehold Property Fund will be enthusiastically welcomed by both institutional and retail investors, including the bank depositors, and that professional management by CP Land and the strategic locations and growth potentials of the office and shopping centre buildings will prove highly attractive to them. Krung Thai Bank, as the underwriter, KTB Advisory and CIMB Thai Bank, as the financial advisors, and KTAM, as the fund manager, are ready to make an initial public offering of investment units in CPTGF”, he concluded.