CPN fund must be bigger to draw foreigners

The listed shopping-complex developer Central Pattana Plc, which owns one-third of CPN Retail Growth Fund (CPNRF), expects the size of the property fund to expand to US$1 billion over three years.

Naris Cheyklin, the company's chief financial officer, said the bigger size would attract more foreign investors.

''We have had a lot of complaints from foreign investors that they could not invest in CPNRF because the fund size was so small and trading liquidity of unit trusts was thin. That's why we want to see our fund size grow to the level that can accommodate them,'' he said yesterday.

CPNRF has high growth potential as CPN has three shopping projects that could be sold to the property fund over the next three years: Central City Bang Na, Central Plaza Rattanathibet and Central Airport Plaza Chiang Mai.

Currently, the fund's asset value stands at 10.91 billion baht. It plans to increase its registered capital by 7.17 billion baht to 18.08 billion baht early next year. The offering will comprise 685.5 million new units, to be split equally among existing unit holders and private placements.

The capital increase is expected to receive approval from the shareholders' meeting next Friday. Foreign investors now make up 53.6% of the fund.

Mr Naris said CPN would spend the funds raised from the asset sales to CPNRF to develop four new projects: in Pattaya, Chon Buri, Khon Kaen and on Chaeng Watthana Road in Bangkok next year.

Jotika Savanananda, managing director of TMB Asset Management, which manages the fund, said the additional funds would be used to acquire 190,236 square metres at Central Plaza Pin Klao Office Towers A and B, and parking space. The Pin Klao project is built on leasehold land with 18 years remaining.

''Central Plaza Pin Klao is the second-highest revenue contributor to CPN after Central Plaza Lat Phrao. Its performance is very healthy,'' she said.

Central Plaza Pin Klao is projected to help boost the annualised yield of CPNRF to 7.7% next year from 7.46% before the acquisition. This year, the property fund will yield 7.5%.

The occupancy rate of the shopping plaza at Pin Klao is 98.5%, while the rate for Office Tower A is 94.2% and Tower B is 62.3%. Major tenants are EGV, Fitness First, Fuji Restaurant, Tops Supermarket and Central Department Store.

The office rent at Tower A is 280 baht per sq m per month and the rate at Tower B is 310 baht. CPN predicts that 55% of existing office tenants will renew their rental contracts in 2007-08.

Rental income after expenses at Central Plaza Pin Klao totals around 650 million baht a month, higher than from Central Plaza Rama II and Rama III.
CPNRF units closed yesterday on the SET at 10.50 baht, up 20 satang, in trade worth 8.3 million baht.