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Fund Manager Financial Advisors / Joint Lead Underwriters Sponsor and Property Manager
Investor Presentation CPN Retail Growth Leasehold Property Fund (“CPNRF”)
December 2013 Disclaimer: -Investment contains certain risks; investors are recommended to study related information before making investment decision. -The approval for capital increase of the CPN Retail Growth Leasehold Property Fund on November 14, 2013 does not mean the Securities and Exchange Commission, the Capital Market Supervisory Board or the Office certifies the completeness or the correctness of the information in the offering documents nor guarantees the price or the return of the fund. -The Fund invests in leasehold rights to the Real Properties. The value of the Investment Units may decrease to Baht 0. -The Fund does not reserve funds for repayment to its unitholders upon dissolution. However, the Management Company may make capital repayment together with the distribution of dividend or only capital repayment prior to dissolution of the Fund. -For the utmost benefits of managing the Fund, the offer for sale of the Investment Units of the Fund or the transferring registration of the Investment Units of the Fund shall solely be under the Management Company’s discretion. The Management Company may reserve to accept or deny to offer for sale of Investment Units of the Fund or to register the transfer of the Investment Units of the Fund for any person. The persons to whom the Management Company unwilling to accept or deny to offer for sale of Investment Units of the Fund or to register the transfer of the Investment Units of the Fund include but are not limited to the citizens of the United States of America, the residents in the United States of America, persons who normally reside in the United Stated of America, as well as the pool assets of such person, and the companies or partnerships which are incorporated and operate in the United States of America. The purchase of the Units were transferred from a bank account, which is outside of the United States to the Underwriter.
For more information, please contact SCB Asset Management Co., Ltd., Tel. 02-777-7777, press 0, and press 6.
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Table of Contents Page
Section 1 CPNRF Summary 3
• Existing Assets Detail Summary
Section 2 2nd Rights Offering of CPNRF 5
• Offering Summary 6
• Transaction Structure 7
• Offering Structure 8
• Pre and Post Acquisition Fund Summary 9
• General Information of CentralPlaza Chiangmai Airport Project 10
• Investment Details 11
• Key Term Summary 12
Section 3 Investment Highlight 13
Section 4 Some Key Concern and Mitigation 19
Appendix Appraisal Valuation Summary 21
4
Existing Assets Detail Summary
Anchor
Shop
Vacant
Total
50,360
34,158
1,348
85,866
Anchor
Shop
Vacant
Total
11,480
25,284
723
37,487
Anchor
Shop
Vacant
Total
4,635
16,828
267
21,730
Year Sq.m. %
Apr - Dec 2013 2014 2015 2016 After 2017 Other Leasable Area (3)
Vacant Area
15,626 17,592 10,682
805 32,516
7,297 1,348
18.2 20.5 12.4
0.9 37.9
8.5 1.6
Total 85,866 100.0
Year Sq.m. %
Apr - Dec 2013 2014 2015 2016 After 2017 Other Leasable Area (3) Vacant Area
7,828 7,223 9,570 1,744 6,731
3,668
723
20.9 19.3 25.5
4.6 18.0
9.8 1.9
Total 37,487 100.0
12
Year Sq.m. %
Apr - Dec 2013 2014 2015 2016 After 2017 Other Leasable Area (3) Vacant Area
4,351 8,928 7,810
- -
374 267
20.0 41.1 36.0
- -
1.7 1.2
Total 21,730 100.0
Year Sq.m. %
Apr - Dec 2013 2014 2015 2016 After 2017 Other Leasable Area (3) Vacant Area
9,143 6,728
13,079 3,801
-
- 1,009
27.1 19.9 38.7 11.3
-
- 3.0
Total 33,760 100.0
98.4%
1,529
83
98.1%
1,455
11
98.8%
2,097
Remark: (1) Anchor and shop tenants only (2) Rental Rate refers to rental and service rates in relation to rental of shop tenants, excluding those with long-term lease
contract with advance payment of rental as well as those with a contract term of less than 1 year (3) Other Leasable Area includes the area leased out for a term shorter than 1 year
N/A
97.0%
422
Remaining Life (years)
Occupancy(1)
Average Retail Rental Rate(2)
(THB/sq.m./month )
Leasable Area (sq.m.)
Expiry Profile by Leasable Area
Pinklao Rama III Rama II
As of 31 March 2013
-
32,751
1,009
33,760
Anchor
Shop
Vacant
Total
Pinklao Tower A &B
Note : please study disclaimer in cover page of this presentation
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Offering Summary Fund Name CPN Retail Growth Leasehold Property Fund (“CPNRF”)
Transaction 2nd capital increase to acquire the new asset
Fund Manager SCB Asset Management Company Limited
Placement Structure
100% of Right Offerings to CPNRF existing unitholders
In the case that any existing unitholders waive their rights to subscribe for the additional investment units, subscribe less
than their entitlements, fail to subscribe within specified period, or for any reason whatsoever, the Management Company
will allot such remaining investment units upon the method the management company deems appropriate.
Sources of Fund Capital Not exceed THB 9.79 bn Local commercial bank loan expected Baht 1,650 million Cash on Fund expected Baht 500 million
Investment Assets
Leasing of the Real Properties of CentralPlaza Chiangmai Airport Project for 30 years Certain parts of 1 shopping complex, 1 multipurpose hall and indoor parking spaces Utilities system Certain parts of land
Asset Appraisers Thai Property Appraisal Lynn Phillips Company Limited Grand Asset Advisory Company Limited
Financial Advisors Siam Commercial Bank Public Company Limited
Maybank Kim Eng Securities (Thailand) Public Company Limited
Transaction Size Not exceed THB 9.79 bn Rights offering of 553.95 m new units (Rights ratio: 0.3385 new units for 1 existing unit)
Sponsor / Property Manager Central Pattana Public Company Limited
Joint-Lead Underwriters
Siam Commercial Bank Public Company Limited
Maybank Kim Eng Securities (Thailand) Public Company Limited
Macquarie Securities (Thailand) Limited
Note : please study disclaimer in cover page of this presentation
7
Transaction Structure
Joint-Lead Underwriters
Existing Unitholders
Property Manager
Investment Committee
New Potential Investors(6)
Fund Manager
Trustee (KBANK)
Registrar (SCB)
Financial Advisors
Auditor (KPMG)
Existing Assets New Asset
CentralPlaza Chiangmai Airport CentralPlaza Pinklao CentralPlaza Rama III CentralPlaza Rama II
Total Net Leasable Area 178,842 sq.m. (5) Net Leasable Area 35,343 sq.m. (4)
Remark: (1) Based on maximum fund raised through new units offerings (2) Based on maximum units to be issued (3) Source : SET, as of 3 December 2013 (4) As of 31 Mar 2013. Net leasable area includes the area leased out to anchor
and shop tenants. Within Nov 2013, the NLA to be invested in will change to approximately 36,648 sq.m. due to area adjustment.
(5) As of 31 Mar. 2013 (6) Through potential placement of units leftover from the existing unitholders if the management company see this allocation method
appropriate
35,971 (1) 26,181 (3) Market Cap (Baht million)
2,190 (2) 1,636 (3) Number of Units (million units)
Pre Acquisition Post Acquisition
33.7 35.9 Average Life of Investment (years)
Maybank Kim Eng SCB Macquarie
Note : please study disclaimer in cover page of this presentation
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Offering Structure
100% Rights Offering
Situation existing unitholders have a 100% right to subscribe new investment units
Scenario 1
Scenario 2
Incomplete subscription from existing unitholders
Placement Details • Pricing will be finalized upon the book building completion. • No control dilution effects to existing unitholders.
Fully subscribed by existing unitholders
Either from • Waived their rights; or • Did not make a timely subscription; or • Did not make a full subscription; or • For any other reason
In this case, the existing units will be allocated upon the method the
management company deems appropriate.
Note : please study disclaimer in cover page of this presentation
9
Pre and Post Acquisition Fund Summary
Anchor
Shop
Vacant
Total
66,475
109,020
3,347
178,842
Anchor
Shop
Vacant
Total
8,104
26,486
753
35,343
Year Sq.m. %
Apr - Dec 2013 2014 2015 2016 After 2017 Other Leasable Area (3)
Vacant Area
36,948 40,471 41,050
6,441 39,248
11,337
3,347
20.7 22.6 23.0
3.6 21.9
6.3 1.9
Total 178,842 100.0
Year Sq.m. %
Apr - Dec 2013 2014 2015 2016 After 2017 Other Leasable Area (3) Vacant Area
6,913 3,116
14,988 2,987 5,244
1,342
753
19.6 8.8
42.4 8.5
14.8
3.8 2.1
Total 35,343 100.0
35.9
98.4%
1,595 (5)
30
97.9% (4)
1,310
Remark: (1) Anchor and shop tenants only (2) Rental Rate refers to rental and service rates in relation to rental of shop tenants, excluding those with long-term lease contract with advance
payment of rental as well as those with a contract term of less than 1 year (3) Other Leasable Area includes the area leased out for a term shorter than 1 year (4) Occupancy rate of the area the Fund will invest (5) Weighted average of retail rental rate upon the area of each asset
Remaining Life (year)
Occupancy(1)
Leasable area (sq.m.)
Expiry Profile
Pre Acquisition
As of 31 March 2013
Anchor
Shop
Vacant
Total
74,579
135,506
4,100
214,185
Year Sq.m. %
Apr - Dec 2013 2014 2015 2016 After 2017 Other Leasable Area (3)
Vacant Area
43,861 43,587 56,038
9,428 44,492
12,679
4,100
20.5 20.3 26.2
4.4 20.8
5.9 1.9
Total 214,185 100.0
33.7
98.0%
1,539 (5)
Post Acquisition Chiangmai Airport
Average Retail Rental Rate (2)
(Baht/Sq.m./Mth )
Note : please study disclaimer in cover page of this presentation
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General Information of CentralPlaza Chiangmai Airport Project
The CentralPlaza Chiangmai Airport One of the largest and modern shopping complexes in Chiangmai and the northern Thailand
Has more than 500 retail outlets Started the operation in 1993 Owned by Central Pattana
Chiangmai Company Limited Under the management of CPN
since March 1996 Located at No.2 Mahidol Road,
252-252/1, Waulai Road, Haiya Sub-District, Muang District, Chiangmai Province 50100
Consists of : • 5-storey shopping complex with
1 basement • 3-storey multipurpose hall • Indoor and outdoor parking
spaces Located on a plot of land with
approximate area of 91 rai
General Information Building
11 elevators; 6 passenger elevators and 5 service elevators
30 escalators Fire suppression system Sprinkler system
Utilities System
Total gross area 174,574 sq.m.
Leasable area 71,777 sq.m.
Occupancy rate 94.5% (1)
Average rental rate 1,310 Baht / sq.m./ month
3-mth Rental and Service Income Baht 230.1 million
3-mth Period Ended March 2013
Remark: (1) The occupancy rate as of the end of the first quarter of 2013 slightly declined to 94.5% due to an area adjustment to serve new tenant(s).
Note : pls study disclaimer in cover page of this presentation
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The utility systems leased are electrical system, telephone system, elevator and escalator systems, air-conditioning system, engineering system and other related assets.
Lease certain parts of 1 shopping complex (5-storey with 1 basement) Lease one multipurpose hall (3-storey) Lease indoor parking spaces (approximately 1,094 cars);
details as follows:
Lease partial land where the shopping complex, the multipurpose hall, indoor parking spaces including certain parts of surrounding roads and entrances and exits of the project are located
The land that the Fund will lease covering an area of 32 rai 3 ngan 56.85 sq.wah from total project land area of approximately 91 rai
30-year Partial Land Lease
30-year Utilities System Lease
Investment Details
30-year Lease
30-year Partial Building Lease
Leasable area (1) (sq.m.) 35,343 (5)
Common area (2) (sq.m.) 33,542 (5)
Service area (3) (sq.m.) 9,964 (5)
Indoor parking spaces (sq.m.) 44,142 (5)
Total gross area (4) (sq.m.) 122,991 (5) (70.5% of project gross area)
LAND BUILDING UTILITIES SYSTEM
OWN OWN OWN
Investment Structure
CentralPlaza Chiangmai Airport Project
Remark: (1) Leasable area means the area leased out to anchor tenants and shop tenants. (2) Common area means the area that is commonly utilized by tenants and customers of the project. (3) Service area means the area for installation of systems. (4) Gross area means leasable area, common area, service area and parking space. (5) Within November 2013, there will be a change in the size of the area the Fund will invest in due to an
adjustment to serve new tenant(s).
30-year Lease
(partial)
Investment will not include the area on which Robinson Department Store is located, the area under long-term lease contracts with advance payment for leasehold right, the area under renovation and parking spaces the Fund will not invest in.
Note : please study disclaimer in cover page of this presentation
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Key Term Summary
Summary of the Draft Lease of Land (Partial) and Building (Partial) Agreement
Summary of the Property Management Service Agreement
The Lessor Central Pattana Chiangmai Company Limited
The Lessee CPN Retail Growth Leasehold Property Fund
The Leased Properties
- Part of land located in Tambol Suthep, Amphur Muang Chiangmai, Chiangmai Province, covering the total leased area of approximately 32-3-56.85 rai
- Parts of building and constructions of CentralPlaza Chiangmai Airport Project consisting of certain parts of shopping complex, multipurpose hall and indoor parking spaces, representing a leasable area of approximately 122,991 square meters.
Lease Term 30 years from the date of registration of the leasehold right under this Agreement
Option to Renew upon Expiration
In the case the Fund obtains an approval from the Office of the Securities and Exchange (the “Office of the SEC”) to continue to invest in the additional real properties or to convert the Fund into the Real Estate Investment Trust pursuant to the relevant laws (“REIT”), Central Chiangmai agrees to give the notice regarding conditions and the value for the renewal of this Agreement to the Fund or the REIT at least nine months before the expiration date of the existing Lease Agreement. Central Chiangmai agrees to grant the right of first refusal to the Fund or the REIT to purchase, and/or accept transfer of ownership and/or right of possession, and/or to lease real properties of CentralPlaza Chiangmai Airport Project.
Conditions Central Pattana Chiangmai Company Limited will be responsible for operating expense for Central Chiangmai Airport Project as per following table
Service Provider Central Pattana Public Company Limited
Service Receiver
CPN Retail Growth Leasehold Property Fund
Service Fee The Property Manager is entitled to property management fees for the Projection Period as stated in the existing property management agreement. The property management fees are divided as follows: - Fee for rental collection not exceeding 3.00% of net rental and service
Income - Property management base fee at a rate not exceeding 0.30 % of
Fund’s net asset value - Property management incentive fee at a rate not exceeding 2.35% of
net property income - Fee for overseeing the improvement and/or development of real
properties of the Fund at the rate of 2.00% of total construction value excluding design fee, advisor fee, and other professional fees.
- Leasing commission as per the following table
Conditions Central Pattana Public Company Limited will give a discount to property management fee as per the following table
Oct – Dec 2013 2014 2015 2016 2017 2018
Discount (%) 100% 100% 75% 50% 25% 0% Maximum Amount (THB mm) 13 62 49 34 18 0
Shopping Malls Office For the renewal tenants 0.5 months 0.5 months New Tenants Contracts < 1 year 0.5 months 0.5 months Contracts ≥ 1 year and < 3 year 1.0 months 0.5 months Contracts ≥ 3 years 1.5 months 1.0 months Contracts > 3 years and with advance rental payments
3% of upfront rent 3% of upfront rent
Oct – Dec 2013 2014 2015 2016 2017 2018
Discount (%) 40% 40% 30% 20% 10% 0% Maximum Amount (THB mm) 11 35 31 20 10 0
Note : please study disclaimer in cover page of this presentation
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Potential Growth in Northern Area
Strong Tenants Mix High Historical Occupancy and Average Rental Rate
Top Class Property Manager
Strategic Location
Investment Highlight 1 : Strategic Location
Easily Accessed Location
The CentralPlaza Chiangmai Airport Project is the shopping complex with easy access as it situates on Mahidol Road, one of the main roads in Chiangmai. The area is surrounded by residential, business communities and Chiangmai International Airport. This creates high traffic to the CentralPlaza Chiangmai Airport project.
Note : please study disclaimer in cover page of this presentation
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Top Class Property Manager
Strategic Location Strong Tenants Mix
Investment Highlight 2 : Potential Growth in Northern Area
• Chiangmai’s Property market has experienced strong growth following the major infrastructure projects in the province, including:
• High ways • Linking roads • High speed train station • Aviation hub
• Provide better regional and local connectivity
• Promote Chiangmai as a “Tourist Hub” of northern Thailand. Chiangmai has welcomed more than 5 million tourists in 2011(1). The number of tourists has grown at the approximate rate of 14% each year from 2009 – 2011 and is expected to grow further due to better transportation, which makes Chiangmai easier to access
Gateway of the North of Thailand
The strong economical growth in Chiangmai will substantially support
the growth of demand which will reflect in the appreciation of asset/property
value in Chiangmai
High Historical Occupancy and Average Rental Rate
Potential Growth in Northern Area
Over the past three years, Chiangmai has become the most financial active province in the Northern Thailand.
Many huge property developer and small boutique are investing in Chiangmai, total investment is more than THB 10 billion.
Those coming developments reflect strong signal to the potential growth capability.
Chiangmai has a significant demand with a steady growth rate of population.
The opening of AEC will greatly support economical growth in Chiangmai.
Source : Department of Tourism, as of 31 Dec 2011
Note : please study disclaimer in cover page of this presentation
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High Historical Occupancy and Average Rental Rate
Top Class Property Manager
Strong Tenants Mix Strategic Location Potential Growth in Northern Area
Investment Highlight 3 : Strong Tenants Mix
Located in a strategic location in Chiangmai, CentralPlaza Chiangmai Airport Project is the one-stop lifestyle shopping complex with full range of leading domestic and international retailers.
The project has been developed and managed to serve families and communities, consisting various retail outlets, a multipurpose hall and a “Northern Village” – local handicraft zone with all-inclusive famous items of the northern region for clients.
Note : please study disclaimer in cover page of this presentation
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High Historical Occupancy and Average Rental Rate
Top Class Property Manager
Strong Tenants Mix Strategic Location Potential Growth in Northern Area
Investment Highlight 3 : Strong Tenants Mix (Cont’)
Fashion, Health and Beauty
Entertainment
Food and Drink
Electronics and Decoration
Others
Vacancies
38.8%
20.3%
15.8%
12.4%
10.6%
2.1%
Tenants on the area to be invested by the Fund can be categorized into various industries as shown : Strong relationship with key tenants provides stable income
and leads to low relocation risk .
Rank Tenants Name Area (Sq.m)
% of total NLA (1)
1
2
3
4
5
Major Cineplex Group Plc.
IT City Plc.
Oishi Group Plc.
A S Watson Group
SLRT Limited – under Minor Food
5,244
908
605
507
406
14.8%
2.6%
1.7%
1.4%
1.1%
As of Q1 2013, the top 5 major tenants of the area to be invested by CPNRF include :
Contract Expiry Profile
19.6% 8.8% 42.4% 8.5% 14.8% 3.8% 2.1%
Apr – Dec 2013 2014 2015 2016 After 2016 Contract less than 1 year
Vacant
Remark: (1)The total NLA includes only the NLA invested by the Fund.
To address tenants’ and customers’ needs, CPN has emphasized on the merchandising mix strategy through market and customer analysis and continuously adjusting the shops as well as finding new local and international retailers to modernize the shopping complex.
Strong and optimal tenants mix also helps to boost business growth and rental prices.
Note : please study disclaimer in cover page of this presentation
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Top Class Property Manager Strategic Location Potential Growth in
Northern Area Strong Tenants Mix High Historical Occupancy
and Average Rental Rate
Investment Highlight 5 : Top Class Property Manager
Experienced management with more than 30 years of success in managing properties. CPN’s retail centers are all located in Thailand with 10 centers situated in Bangkok’s Metropolitan Area and other 11 centers situated in provinces.
… with outstanding achievement guaranteed by many awards … and launched 2 Thai successful PFPOs
One of Thailand’s largest Property Fund
First of its kind Property Fund to use leverage to enhance yield to investors
Trade at higher P/NAV among other Property Funds in the market
The large complex situated in the heart of Bangkok. It provides an international shopping experiences.
Aim to match every lifestyle, fashion and entertainment of residences in major cities over Thailand.
Provide the shopping and entertainment experience with holiday spirit and local novelty
Office Property Fund with highest subscriber in Thailand; 17,000 subscribers
Issued at the top price range from Institutional Bookbuilding
ASEAN Energy Awards 2012
Thailand Energy Awards 2012
Thailand Quality Class Award Honored for the third consecutive years of
CentralPlaza Chiangmai Airport
A+ Credit Rating in February 2012
Top Corporate Governance Report the 2nd
consecutive year and the third time since 2008
Excellence CG Scoring in 2012 which
is the 4th consecutive year since 2009
Note : please study disclaimer in cover page of this presentation
20
Key Concern
Cannibalization possibly occur between the two projects. However, the two aim to attract different group of customers with different store format. Thus the cannibalization effect might not be substantial.
There might also be a concern on conflicts of interest involving CentralPlaza
Chiangmai Airport and the coming up CentralFestival Chiangmai as CPN is a property manager for both assets. However, CPN has to set a firm protocol when placing its potential tenants. CentralFestival tenants are more international brands than those of CentralPlaza. The following table shows different types/brands of tenants to be located in the two projects
Potential Cannibalization and Conflict of Interest
CentralPlaza Chiangmai Airport
CentralFestival Chiangmai
Department Store Robinson Central
Supermarket Tops Supermarket Central Food Hall
Business unit homeWorks Office Depot
Mittigation
Note : please study disclaimer in cover page of this presentation
Customers make decision on their rental location ( see more details in item Risk Factors of fund scheme )
( see more details in item Risk Factors of fund scheme )
22
Appraisal Valuation Summary
Real Properties Appraisers Date of Appraisal Appraised Value
(Baht million)
Appraised value of Existing Assets
The CentralPlaza Rama II Project 29 March 2013 6,029
The CentralPlaza Ratchada-Rama III Project 29 March 2013 5,939
The CentralPlaza Pinklao Project 29 March 2013 5,573
Total 17,541
Appraised Value of the Asset to be Invested by the Fund
The CentralPlaza Chiangmai Airport Project
7 November 2013 10,565
7 November 2013 10,632
Average 10,599
Implied Acquisition Valuation Not exceed 11,568
Remark: The appraised values are based on the Income Approach method
Note : please study disclaimer in cover page of this presentation