In 2024, the REIT Manager of CPN Retail Growth Leasehold REIT (“CPNREIT”) has been focusing on generating revenue alongside managing costs and liquidity maintenance, controlling operational efficiency-expenditure and sufficient cash flow for business management and operations, including continuous growth under the CPNREIT investment policy, as well as creating sustainable returns for trust unitholders by prioritizing trust-investment management of existing invested assets and the additional asset investment as follows:
The Extraordinary General Meeting of Unitholders No.1/2023 held on 31 July 2023 resolved to approve the lease renewal of Central Pinklao Project for another 15 year lease period, and for the lease renewal of Central Rama 2 Project to follow the original terms of 30 year lease period, with a 10 years upfront rental fee payment, by total not exceeding THB 25,014 million. Altogether with the approval of the issuance and sale of additional trust units not exceeding 1,100 million units, allotted as a portion of the additional investments to be made at this stage. The remaining portion will be financed by borrowing not exceeding THB 18,000 million. Moreover, the major renovation of Central Pinklao Project is expected to take place during 2024-2025 was also approved, with total budget not exceeding THB 1,100 million.
The investments in both projects are in line with CPNREIT’s investment strategy to invest in assets with high potentials. Both assets are exceptionally considered by their locations, customer base, and proven track record to deliver strong performance that CPNREIT had originally invested in. Subsequent to the lease renewal of both projects, CPNREIT portfolio will be optimal in terms of lease maturity as well as well-diversified locations and revenue sources, which will lead to sustainable revenues growth and attractive returns to trust unitholders.
On 8 May 2024, the REIT Manager renewed the leasehold agreement for Central Pinklao project for 15 years, total value of THB 12,161 million. CPNREIT successfully raised funds from the capital increase of THB 10,741 million from the issuance and sale of additional trust units totaling 1,053 million, together with the borrowing from financial institution of THB 2,020 million. In 2025, the REIT Manager will raise funds from loans and/or issuuance and offer for sale of debentures to pay for the leasehold rights of the Central Rama 2 project (renewal period) for the first 10 years of lease worth THB 12,853 million and the payment of fees and other related expenses.
In the past year, there has been the asset enhancement of shopping malls that CPNREIT has invested in namely Central Pinklao project, aiming to be New Soul of the District or the Center of Thonburi district, which is expected to be completed in the third quarter of 2025 by creating new Magnet Destinations including Fashion, Food Hub, Family & Edutainment, the best in the area. Also Central Chiangmai Airport project, which will transform the Retail Landscape, upgrade the new Master Planning with new famous brands, as well as expand the Kad Luang Zone or Indoor Local Market and Hug Craft & Northern Village zone as a tourist magnet along with the growth and expansion of Chiang Mai City and the airport. It is expected to be completed in the second quarter of 2026
The REIT Manager and the property manager have jointly and continuously taken care of and developed the shopping center to increase the number of visitors and attract both Thai and foreign tourists, in alignment with government measures to stimulate tourism, by continuously organizing marketing and sales promotion activities and organizing a grand year-end campaign at shopping centers to attract more shoppers and to promote sales to lessees and partners via online and offline communication channels, coupled with ongoing cost control measures to maintain profitability.
CPNREIT still maintained high occupancy rate of shopping centers at 95%, and Hilton Pattaya Hotel’s operation had significantly improved from the recovery in tourism with the average occupancy in 2024 was 93%, increased from the previous year. Meanwhile, the overall market for commercial real estate office remains highly competitive throughout 2024, from demand for office space continued to evolve as organizations strategize for more efficient workspace usage, as well as a trend of large supply of newly built office space is trended to enter the market. Therefore, the average occupancy rate of office buildings in CPNREIT was 84%, a slight contraction from the previous year.
Operating performance notwithstanding the impact from Thai Financial Reporting Standards (TFRS 16) in 2024 reports a total revenue of THB 6,074 million, reflecting a 4.1% increase from the previous year. This indicates a continuous recovery across all asset types; shopping mall business achieved higher shopper traffic recovery, higher income from promotional areas and rental income from turnover rent. Office business reported higher rental income following the increase of contractual rents, although stabilized occupancy despite high competition from potential new supply. Hotel business also reported higher rental income from the annual rent increase as per the contract. Hilton Pattaya achieved higher occupancy rate and room rates in line with the growth of tourism sector. Concurrently, total expenses were close to the previous year, resulting from a decrease of interest expenses under the declining interest rate environment and the lower amount of interest-bearing liabilities. Therefore, CPNREIT reported net profit on investments of THB 4,162 million, increased by 5.7% YoY, and net increase in net assets from operations was THB 3,812 million, decreased by 14.6% YoY due to loss from changes in the fair value of investments.
Given the improved performance, the REIT Manager considered the distribution payment to trust unitholders in total of THB 1.0620 per unit, divided into distribution of returns of THB 0.7217 per trust unit and payment in the form of capital reduction of THB 0.3403 per unit.
At the end of 2024, CPNREIT reported total assets of THB 92,102 million, increased by 13.2%YoY, driven by the lease renewal of Central Pinklao project, and total borrowings and debentures of THB 21,696 million, resulting in net assets per unit of THB 11.7901, decreased from THB 13.0289 per unit at the end of 2023. CPNREIT was assigned the credit rating at ‘A+’ with a ‘stable’ outlook by TRIS Rating Co., Ltd., reflecting stable cash flow stream from contract-based income as well as growth prospects from continued recovery in overall operating performance and potential new asset acquisitions.
As the REIT Manager and property managers consider the Environment Social Governance (ESG) essential to its operations, CPNREIT has been recognized for its outstanding sustainability following its sustainability assessments from S&P Global, known worldwide as a standard for analyzing and making investment decisions, and has been recognized as a Member in the S&P Global Sustainability Yearbook 2025 for the fourth year. CPNREIT has also participated in the Global Real Estate Sustainability Benchmark (GRESB) assessment and rating for the fourth year running.
The REIT Manager would like to thank all trust unitholders for their continuous trust and support. The REIT Manager is determined to manage CPNREIT for sustainable growth that generates stable returns for the trust unitholders by operating under good and transparent corporate governance principles.