In 2021, economic activities were restricted under waves of Coronavirus (COVID-19) outbreaks and government control measures in Thailand until significant vaccination progress in the fourth quarter. The economy has been slowly recovering as the epidemic subsides, at a 1.6% growth rate.
Amid managerial challenges, CPN Retail Growth Leasehold REIT (CPNREIT) has been focusing on generating sustainable revenue and growth under its investment policy for unitholders with the following actions:
CPNREIT had invested in The Ninth Towers and the Unilever House office buildings, under the resolution of the Extraordinary General Meeting of Trust Unitholders No. 1/2019 (“EGM No. 1/2019”), and successfully renewed leasehold rights for Central Rama 2 in March 2020. However, investments in additional assets were postponed until early 2021 as capital markets were being affected by the epidemic from early 2020 onward. In due course, CPNREIT raised THB 6,577.8 million in capital through offered trust units to invest THB 5,672.0 million in two projects, Central Marina (Pattaya) and Central Lampang, and received the complete transfer of the assets on 25 February 2021. CPNREIT has thus invested in a total of 12 additional assets, comprising 7 shopping centers, 4 office buildings, and one hotel, with a combined lease space of approximately 358,000 square meters.
To satisfy the resolutions of the EGM No. 1/2019, investments in the two remaining additional assets, Central Suratthani and Central Ubon will be considered upon improved capital market conditions that allow the issuance and offering of trust unit.
The REIT Manager together with the property manager here cooperated and complied with government epidemic control measures, reinforcing forced closures of certain businesses and shopping centers in Bangkok and Chonburi for 1.5 months and restrictions on the number of seats in restaurants in the third quarter of 2021, along with proactive measures to manage and retain the value of CPNREIT assets effectively. Disinfection and security measures have been strictly reinforced with visitors to CPNREIT premises while rental fees have been lowered or exempt to help shopping center tenants who were affected by the epidemic. CPNREIT has also implemented a cost management plan to optimize resource allocation and utilization, control expenses, mitigate the impact on revenue and profitability, and operate adequate cash flow for business operations. As a result, CPNREIT maintains over 90% of occupancy and lease renewals.
Central Rama 2 underwent the major renovation between July 2020 and November 2021 to maximize quality and return on the CPNREIT asset, namely adopting the format, space, and ambiance of the entire shopping center to Destination Concepts, rebranding Central Department Store and Tops Supermarket to seamless Central Shopping Food Hall, alongside hosting the largest SuperSports in the area and world-famous collections of fine dining.
CPNREIT’s rental and service income amounted to THB 3,501.6 million, a 13.4% drop year-on-year, as CPNREIT has provided rental discount and rental waiver to shopping mall tenants and waived rental income from hotel business to the hotel sub-lessee during the year due to COVID-19 pandemic. Nevertheless, after considering 2021 operating results along with operating cash flow, future loan repayment, and reserve MESSAGE FROM THE BOARD OF DIRECTORS 10 ANNUAL REPORT 2021 provisions, CPNREIT announced a the distribution payment of THB 0.6032 per unit to trust unitholders, comprising THB 0.0552 as distribution of returns and THB 0.5480 as capital reduction.
By the year ending 2021, CPNREIT had THB 75,370.6 million investment in leasehold Properties at fair value, a 10.4% rise year-on-year from investments in additional assets, while total borrowings and debentures of THB 22,561.5 million, resulting in THB 13.1691 of net assets per unit, an increase of 3.9% year-on-year.
In addition, TRIS Rating Co., Ltd. maintained CPNREIT’s credit rating at ‘AA’ with a ‘negative’ outlook, reflecting high-quality assets and predictable cash flows from leasing and rendering services revenues under prudent contractual terms and financial policy.
As the REIT Manager and the property manager have taken environmental, social, and governance (ESG) into the operation, CPNREIT stood out for its sustainability and was evaluated by S&P Global, which is the important information for all investors worldwide in analyzing and making investment decisions. CPNREIT was included in the 2022 Sustainability Yearbook by S&P Global as a Member recognized for outstanding sustainability performance. Additionally, CPNREIT participated in the Global Real Estate Sustainability Benchmark (GRESB) for the first time.
CPNREIT would like to thank all trust unitholders for their trust and support in good and bad times. REIT managers intend to manage trust funds for sustainable growth and generate stable returns for the unitholders under good Corporate Governance.