30 November 2006

Part 3 Independent Financial Advisor 's Opinion regarding the Transaction of Investing in the Central Plaza Pinklao Project 1) Independent Financial Advisor's Opinion regarding the Rationale and Reasonableness of the Transaction Objectives and Rationale of the Transaction The main objectives in establishing and managing the Fund are to mobilize funds and use the proceeds of such mobilization for purchasing and leasing real properties and seeks benefits from them with the view to generate income and returns for the Fund, make an appropriate level of dividend payment to unitholders on a continuous basis and increase the Funds NAV in the long-term. For the Management Company and the Property Manager to achieve such objectives, in addition to the ability to manage the invested real properties effectively, the main investment strategy the Fund has employed is to expand its investment into real properties with good location and potential to generate good income and return in the long-term, thus increasing the Fund's investment return and NAV. In accordance with the Fund's investment policy, the Management Company, as the management company of the Fund, will concentrate on investments by way of acceptance of transfer of ownership and/or leasehold rights in commercial property or any other kind of real property. The Management Company will primarily concentrate on the investment in or acquisition of existing and future real properties which are department stores and/or r etail properties in which CPN and/or the Related Persons have ownership and/or possession right. Investing in the Central Plaza Pinklao Project that is a large commercial property project located on the west of Bangkok and has been under management by CPN conforms to the Fund's investment policy that focuses on generating good level of investment return to unitholders in the long-run. Investing in the Central Plaza Pinklao Project would provide benefits to the Fund and its unitholders as follows: Benefits of Investing in the Central Plaza Pinklao Project 1. Investing in the Central Plaza Pinklao Project allows the Fund to invest in a commercial property project with potential to generate a good level of investment return Investing in the Central Plaza Pinklao Project, regarded as the commercial property project with the potential to generate good level of income and investment return in the long-term, allows the Fund to make an appropriate level of dividend payment to its unitholders on a continuous basis, thanks to its strengths as follows: - Location: The Central Plaza Pinklao Project is located on the Borommaratchachonnani Road that is the main route to the west of the country. The location of the Project can be reached by several public transportation means, and is the connected point for commuters who live in the suburb areas of Bangkok. It is located around a large number of residential and educational communities. - Diversification of Tenant Base: Tenant base in the Central Plaza Pinklao Project is well diversified, consisting of many types of businesses and categories of tenants such as theatre, retail outlet providing many different of products such as fashion merchandise and electronic products, book outlet, restaurant and etc. Tenant mix balance and zoning arrangement are appropriately and well arranged to increase the customer traffic. - High Occupancy Rates: The occupancy rate of the part of the Central Plaza Pinklao Shopping Complex to be invested by the Fund as at August 21, 2006 was 98.2 %. Thus, it could be regarded as the shopping complex with a very high occupancy rate. The Office Buildings (both A and B) of the Project to be invested by the Fund had an occupancy rate of 83.2 % as at June 30, 2006. Thus, the Central Plaza Pinklao Project could be regarded as the commercial property project with a very high occupancy rate. - Synergistic Benefit from Having the Shopping Complex and the Office Buildings in the Same Project: Having a shopping complex located in the same area as that of office buildings would create synergistic benefit for both types of real properties as many of office workers as well as those who go to business in the office buildings could go shopping in the shopping complex as well. At the same time, tenants in the office buildings could share facilities in the shopping complex. Many tenants in the office buildings run businesses those are complementary with retail businesses such as educational center, health center and etc. This would allow them to have more opportunities to reach their target customers. Having a shopping complex located in the same area as that of office buildings would also create synergistic benefit in terms of management of parking area. From the strengths of the Central Plaza Pinklao Project as discussed earlier coupled with the expertise in the business of shopping complex management of CPN that would act as the property manager, expanding of investment into the Project would provide benefit to the Fund and its unitholders. 2. Investing in the Central Plaza Pinklao Project would help to diversify the Fund's source of revenue by expanding its investment into a commercial property project with the shopping complex and the office buildings Since the inception of the Fund, its major source of revenue has been in the form of rental and service revenue from the Central Plaza Rama II Project and the Central Plaza Ratchada-Rama III Project. Expanding its investment into the Central Plaza Pinklao Project that consists of a shopping complex and two office buildings would help the Fund to rely less on rental and service revenue from those two shopping complex projects. Investing in the Central Plaza Pinklao Project not only allows the Fund to derive additional revenue from a shopping complex located in another location but also to diversify a portion of its revenue to another type of commercial property in the form of office building. 3. Improving trading liquidity of CPNRF investment units in the secondary market The issuance and offering of additional CPNRF investment units on a rights offering and a private placement basis would increase the total investment units issued from the current amount totaling 1,091.5 million units to the amount not to exceed 1,777 million units. This may help to boost trading liquidity of CPNRF investment units in the secondary market, thanks to increasing number of investment units as well as expansion of investor base. 4. Increase in Forecast Dividend per Unit (DPU) In investing in the Central Plaza Pinklao Project, although additonal investment units would be issued and offered to existing unitholders and new investors, investment return expected to earn from such additional commercial property investment would allow existing unitholders to earn return in the form of increase in forecast dividend per unit (DPU). According to the analysis of forecast dividend per unit (DPU) improvemen t of the investment in the additionally invested commercial property as showed in Attachment 5 of the Invitation Letter to Unitholders'Meeting of the CPN Retail Growth Property Fund No.1/2549, with details of Forecast for 11-month period from February 1, 2007 to December 31, 2007 of the Fund as prepared by the Management Company and CPN and reviewed by KPMG Phoomchai Audit Limited, a certified auditor, the forecast dividend per unit for the 11-month period from February 1, 2007 to December 31, 2007 anticipated to be received by the existing unitholders after the additional investment would be higher than that the unitholders would receive from the initially invested properties over the same accounting period. Nevertheless, in the long-term, dividend per unit may increase or decline, depending upon many factors such as competitive forces in the market, expenses and cost in relation to real estate management, additonal investment in the future, other economic factors and etc. Risk Factors Stemming from Investment in the Central Plaza Pinklao Project that May Have an Impact on the Fund's Return Although the Central Plaza Pinklao Project is a commercial property project with good potential to generate a good level of income and return, thanks to its good location, capable and experienced Property Manager and well and appropriately arranged tenant mix and zoning arrangement, there are still some risk factors relating to such property that may affect the Project's ability to generate revenue and income. This will affect the Fund's investment return. Relevant risk factors that may materially affect the Fund's investment return include: - Risk from competition from the nearby retail shopping projects The Central Plaza Pinklao Project is located opposite to the area that is the location of the Major Cineplex Pinklao Project - a theater complex with retai l outlets. Customers can walk across between the Central Plaza Pinklao Project and the Major Cineplex Pinklao project using the pedestrian crossover in front of both properties. As the two projects are located in a very close proximity, competition is possible on some common businesses such as food and beverage operators. However, as the Central Plaza Pinklao Project is a large shopping complex consisting of Central Department Store, educational centers as well as variety of retail shops, it is likely to fulfill the needs of customers in a broader range. - Risk relating to external environment of the property The Central Plaza Pinklao Project is located on the Borommaratchachonnani Road, Pinklao area in the west part of Bangkok Metropolis. Operations of such project are therefore dependent on surrounding environment, community, business, trades, and transportation condition in the area. Any changes to those factors, if any, may affect the number of customers who shop and consume at the project that may ultimately impact the Fund's operations. For instance, a construction or repair of the Borommaratchachonnani Road (if any) may increase traffic congestion and result in a declining number of customers. - Risk relating to Tenants' Ability to Pay Rental The ability to operate of the tenants will affect their rental payment, lease renewal or early termination of the lease. All these factors will have direct impact on the income of the Fund. Nonetheless, the deposit equivalent to 3-6 months rental that is required in the execution of every lease agreement can also be used as compensation for income of the Fund in case rental cannot be collected from tenants. As well, CPN, as the Fund's Property Manager, will procure new tenants to generate income for the Fund on a continuous basis. - Risk from the Fact that the Fund does not have the right over the space of Central Department Store at the Central Plaza Pinklao Project The Central Department Store, located in the Central Plaza Pinklao Project, is not a tenant of the Central Plaza Pinklao Shopping Complex, and accordingly may sell or sublease its land and spaces to any person whereby the Fund will have no right of objection. Such act may affect the management of the Shopping Complex and results of the Fund operation. - Risk from Exposure to the Office Market Performance of the Fund after the investment in Central Tower A Pinklao and Central Tower B Pinklao may be different from the performance of the fund before the additional investment that is generated entirely from shopping complexes. Nevertheless, according to the revenue forecast of the Fund during the period from February 1, 2007 to December 31, 2007, the revenue from both office buildings is anticipated to be approximately 6 percentage of the forecasted revenue of the entire portfolio after this additional investment. - Risk from Rental Guarantee on the Central Tower B Pinklao for the period of twelve months The Central Tower B Pinklao has recommenced its operation in March 2006. Given the occupancy rate of 50.83 percentage as of 30 June 2006, CPN, as the original owner of the Central Tower B Pinklao, therefore, agreed to provide the Fund with twelve-month rental income guarantee amounting approximately Baht 41.1 million from the date of the Fund's investment in the Central Tower B Pinklao. Actual rental income from the Central Tower B Pinklao after the guarantee period may be different from the guarantee amount during such twelve months, depending on the ability to lease the areas out to tenants on the Central Tower B Pinklao after such guarantee period. - Refurbishment and Relocation within the Central Plaza Pinklao Project In addition to annual normal renovation, the Property Manager has a plan to relocate the food center from the existing location on the fifth floor of the building that Central Department Store is located to the extension area within the same floor that will be part of the areas under investment by the Fund. The relocation will result in a temporary disruption of services of the food center, which may impact the number of customers to some extent. However, the Property Manager will set up a plan to minimize the impact on the shops and the customers. - Risk relating to Non-Compliance with Sublease Agreement by Sub-Lessor of Land and Lease of BuildingsThe investment in real properties by the Fund in the Central Pinklao Plaza Project will be in the form of investment in or possession of subleasehold rights and leasehold rights in real properties. The Fund will register the long-term leasehold rights for its investment in such subleasehold rights and leasehold rights with competent officers, and CPN had made all advanced payments under the land lease agreement between CPN and Central Department Store Company Limited as the landowner. Although the termination of subleasehold rights of land will not cede the rights to use the Shopping Complex and the Office Buildings by the Fund, inconveniences may arise on the usage of surrounding areas of the buildings. Therefore, in order to reduce the risk that CPN breaches the conditions prescribed in land lease agreement with the landowner and causing the termination of the subleasehold rights agreement between CPN and the Fund, CPN will arrange for the Fund to obtain the consent from the landowner of the land where the Central Plaza Pinklao Shopping Complex and the Office Buildings are located to become the party in the land lease agreement replacing CPN prior to the Fund's investment in these real properties. - Risk from the fact that Insurance Proceeds May not Cover Actual Damages The Fund may suffer a financial loss as the insurance proceeds may not fully cover the damage and there are certain risks for which insurance coverage cannot be procured. In case of non-covered damages or damages which exceeds the insured amount, or in case the Fund cannot claim compensation in full according to the insurance policy, the Fund could incur additional expenditure that cause the future income of the real property to deviate from the projection. Nonetheless, the Fund has procured several kinds of insurance by taking into account the comprehensiveness and appropriateness in accordance with the nature of business operation of shopping complexes and office buildings and the nature of management that a property manager should procure. - Risk relating to the Ability to Pay Dividend of the Fund The dividend payment of the Fund will be determined by its operating results that are dependent upon various factors such as domestic and international economic condition, the management ability of the Property Manager, the cost of management of real properties, the operating expenses, the competition from other shopping complexes, the change in regulations and law relating to real properties and etc. Rationale and Necessity for Pursuing the Transaction with the Connected Person Given the business of operating and managing shopping complexes require substantial amounts of investment and deep understanding & experience in retail businesses, entrants into the business by new entrepreneurs is quite difficult. Most shopping complexes run by most new entrepreneurs are in the form of small shopping complexes located in the communities, and they may lack variety of retail & shopping outlets. Currently, most large shopping complexes with good location and high occupancy rate located in Bangkok and its suburb areas are run by the CPN Group and the Mall Group, both of which are leaders in the Thai shopping center business. Thus, there are not so many choices of real properties investment with good potential in terms of revenue and income growth to be additionnaly invested by the Fund. Investing in the Central Plaza Pinklao Project that is one of the shopping complex projects with potential to generate appropriate level of income and investment return thanks to its good location, appropriate arrangement of tenant mix and zoning as well as having CPN as the Property Manager should be able to generate good level of return to the Fund and its unitholders. As well, investment in the Central Plaza Pinklao Project conforms to the Fund's investment policy that concentrates on investments by way of acceptance of transfer of ownership and/or leasehold rights in commercial property or any other kind of real property. The Management Company will primarily concentrate on the investment in or acquisition of existing and future real properties that are department stores and/or retail properties in which CPN and/or its related persons have ownership and/or possession rights. For a period of 7 years after the Fund is established, it will have the right of first refusal from CPN and/or any company controlled by CPN to invest in existing and future department stores and/or retail properties which CPN and/or any company controlled by CPN intend to transfer or dispose of such properties to any person, while CPN will still retain property management rights.Additional Factors to be Considered when Pursuing the Transaction with the Connected Person - Concerns about whether the Condition and Pricing of the Transaction Are Fair and on Arm's Length Basis Pursuing the transaction with connected persons may raise some concerns whether negotiation on the conditions and pricing of the transaction is conducted on an arm's length basis. In considering the appropriate price to be paid for investing in the Central Plaza Pinklao Project, the Fund appointed two independent asset appraisers to study and assess the appropriate price for the part of Project to be invested. Information in relation to the asset's appraised price will be provided to unitholders for their consideration whether to approve the transaction. CPN, as the Fund's major unitholder and Property Manager, as well as its connected persons, regarded as interested unitholders, have no voting rights to vote for the transaction. The Fund also sets up its internal working team and appoints financial advisors and legal advisor to conduct study regarding the feasibility and the impact of capital increase on the Fund and its unitholders to ensure pursuing the transaction of acquiring the Project would provide benefit to the Fund and its unitholders and conform to all applicable rules and regulation. The price which the Fund will be investing in the real properties will be determined by the proceeds which the Fund will receive from its capital increase, deducted with estimated expenses for the issuance and offer for sale of the additional investment units, the expenses for acquisition of the real properties (e.g. various fees and taxes) and working capital for management of the project (equivalent to general expenses of the Fund for a period of approximately 1 month). The pricing method for determining the price of the additional investment units offered for sale shall be a bookbuilding process at various prices that reflect a value of the real properties acceptable to investors and the owner of the real properties. The final price of the additional investment units, which shall fall within the price range, will be fixed taken into accounts, among other things, the prevailing market price of the Fund's investment units on the Stock Exchange of Thailand (the 'SET') during the period when the additional investment units are issued and offered for sale, the general market condition and indication of interests received from investors during the bookbuilding process.Prior to proposing to the meeting of unitholders for approval of the transaction of investing in the Central Plaza Pinklao Project, the Fund 's Investment Committee, consisting of 5 committee members, would carefully consider the appropriateness, the benefit as well as prospect return the Fund and its unitholders would earn from investing in the Project. Interested committee members will not participate in the meeting of the Investment Committee and have no voting rights for the transaction. Additional Factors to be Considered in Pursuing the Transaction of Acquiring the Central Plaza Pinklao Project 1. Redemption of the Shopping Complex and the Office Buildings Located in the Central Plaza Pinklao Project from TBF 2 and Termination of Contract in relation to the Leasing of the Public Utility Systems related to the Project CPN, the owner of the Central Plaza Pinklao Shopping Complex, the Office Buildings, and the parking area therin, sold the said Central Plaza Pinklao Shopping Complex, the Office Buildings, and the parking area therin with the right of redemption for a term of 10 years, and sublease the land that is the location of the Central Plaza Pinklao Shopping Complex, the Office Buildings, and the parking area (CPN has leased the land from the owner that is Central Department Store Company Limited) to the Thai Business Fund 2 on December 21, 2001. Moreover, the Thai Business Fund 2 has (more)