Central Pattana Public Company Limited is launching CPN Retail Growth Property Fund, the first and largest retail REIT in Thailand. The fund will raise approximately Baht 11 billion (US$265 million) from local retail and institutional investors (local and international) through an IPO, which will run from August 1-9, 2005. CPN will purchase 33% of the total issued investment units of the Fund.
Proceeds from the Fund’s IPO will be used to purchase certain buildings and leasehold rights on two shopping malls, namely Central Plaza Rama 2 (total area of approximately 251,182 square meters) and Central Plaza Ratchada-Rama 3 (total area of approximately 169,740 square meters). The fund will have a 20-year leasehold right on Central Plaza Rama 2 and an effective 90-year leasehold right on Central Plaza Rama 3.
Similar to U.S. REITs, the fund is required to payout at least 90% of net profits as dividends, which will be paid up to four times a year. The dividend yield to investors of the fund for the first 12 months is expected to be 7.30%. Revenues of the Fund will mainly come from fixed rental contracts with varying maturities.
Lombard’s Thailand Equity Fund invested approximately US$24 million in Central Pattana to help finance the redevelopment of Central World Plaza and provide capital for other acquisitions. Lombard is an active board member and advises on a variety of matters, including acquisitions and corporate finance.