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.
Financial Advisors / Joint Lead Underwriters Fund Manager Sponsor and Property Manager 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
2 CPNRF Summary
Note : please study disclaimer in cover page of this presentation
3 As of 31 March 2013 Existing Assets Detail Summary
Rama II Rama III Pinklao Pinklao Tower A &B Remaining Life 12 83 11 N/A (years)
Occupancy(1) 98.4% 98.1% 98.8% 97.0% Average Retail Rental Rate(2) 1,529 1,455 2,097 422 (THB/sq.m./month ) Anchor 50,360 Anchor 11,480 Anchor 4,635 Anchor -
Leasable Area Shop 34,158 Shop 25,284 Shop 16,828 Shop 32,751 (sq.m.) Vacant 1,348 Vacant 723 Vacant 267 Vacant 1,009
Total 85,866 Total 37,487 Total 21,730 Total 33,760
Year Sq.m. % Year Sq.m. % Year Sq.m. % Year Sq.m. %
Apr - Dec 2013 15,626 18.2 Apr - Dec 2013 7,828 20.9 Apr - Dec 2013 4,351 20.0 Apr - Dec 2013 9,143 27.1 2014 17,592 20.5 2014 7,223 19.3 2014 8,928 41.1 2014 6,728 19.9 2015 10,682 12.4 2015 9,570 25.5 2015 7,810 36.0 2015 13,079 38.7 Expiry Profile by 2016 805 0.9 2016 1,744 4.6 2016 - - 2016 3,801 11.3 Leasable Area After 2017 32,516 37.9 After 2017 6,731 18.0 After 2017 - - After 2017 - - Other Leasable Other Leasable Other Leasable Other Leasable Area (3) 7,297 8.5 Area (3) 3,668 9.8 Area (3) 374 1.7 Area (3) - - Vacant Area 1,348 1.6 Vacant Area 723 1.9 Vacant Area 267 1.2 Vacant Area 1,009 3.0
Total 85,866 100.0 Total 37,487 100.0 Total 21,730 100.0 Total 33,760 100.0 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 Note : please study disclaimer in cover page of this presentation 4 2nd Rights Offering of CPNRF
5 Offering Summary Fund Name CPN Retail Growth Leasehold Property Fund (“CPNRF”)
Transaction 2nd capital increase to acquire the new asset
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 Investment Assets . Utilities system . Certain parts of land
. Thai Property Appraisal Lynn Phillips Company Limited Asset Appraisers . Grand Asset Advisory Company Limited . Not exceed THB 9.79 bn Transaction Size . Rights offering of 553.95 m new units (Rights ratio: 0.3385 new units for 1 existing unit) Capital Not exceed THB 9.79 bn Sources of Fund Local commercial bank loan expected Baht 1,650 million Cash on Fund expected Baht 500 million
Sponsor / Property Manager Central Pattana Public Company Limited
Financial Advisors Siam Commercial Bank Public Company Limited Maybank Kim Eng Securities (Thailand) Public Company Limited
Siam Commercial Bank Public Company Limited Joint-Lead Underwriters Maybank Kim Eng Securities (Thailand) Public Company Limited Macquarie Securities (Thailand) Limited
Fund Manager SCB Asset Management Company Limited
100% of Right Offerings to CPNRF existing unitholders
Placement Structure 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. Note : please study disclaimer in cover page of this presentation 6 Transaction Structure Existing Unitholders New Potential Investors(6)
Joint-Lead Underwriters Fund Manager Maybank Kim Eng SCB Macquarie
Financial Advisors
Pre Acquisition Post Acquisition Investment Committee Market Cap Trustee (KBANK) 26,181 (3) 35,971 (1) (Baht million) Number of Units Registrar (SCB) 1,636 (3) 2,190 (2) (million units)
Auditor (KPMG) Average Life of 35.9 33.7 Investment (years)
Property Manager New Asset Existing Assets
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 CentralPlaza Chiangmai Airport CentralPlaza Pinklao CentralPlaza Rama III CentralPlaza Rama II (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 Net Leasable Area Total Net Leasable Area 178,842 sq.m. (5) approximately 36,648 sq.m. due to area adjustment. 35,343 sq.m. (4) (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 Note : please study disclaimer in cover page of this presentation 7 Offering Structure
100% Rights Offering
Situation existing unitholders have a 100% right to subscribe new investment units
Fully subscribed by Scenario 1 existing unitholders
Incomplete subscription from existing unitholders In this case, the existing Either from units will be allocated Scenario 2 • Waived their rights; or upon the method the • Did not make a timely subscription; or management company • Did not make a full subscription; or deems appropriate. • For any other reason
• Pricing will be finalized upon the book building completion. Placement Details • No control dilution effects to existing unitholders.
Note : please study disclaimer in cover page of this presentation 8 As of 31 March 2013 Pre and Post Acquisition Fund Summary
Pre Acquisition Chiangmai Airport Post Acquisition
Remaining Life 35.9 30 (year) 33.7
Occupancy(1) 98.4% 97.9% (4) 98.0%
Average Retail Rental Rate (2) 1,595 (5) 1,310 1,539 (5) (Baht/Sq.m./Mth )
Anchor 66,475 Anchor 8,104 Anchor 74,579 Shop 109,020 Shop 26,486 Leasable area Shop 135,506 (sq.m.) Vacant 3,347 Vacant 753 Vacant 4,100
Total 178,842 Total 35,343 Total 214,185
Year Sq.m. % Year Sq.m. % Year Sq.m. %
Apr - Dec 2013 36,948 20.7 Apr - Dec 2013 6,913 19.6 Apr - Dec 2013 43,861 20.5 2014 40,471 22.6 2014 3,116 8.8 2014 43,587 20.3 2015 41,050 23.0 2015 14,988 42.4 2015 56,038 26.2 Expiry Profile 2016 6,441 3.6 2016 2,987 8.5 2016 9,428 4.4 After 2017 39,248 21.9 After 2017 5,244 14.8 After 2017 44,492 20.8 Other Leasable Other Leasable Other Leasable (3) Area (3) 11,337 6.3 Area 1,342 3.8 Area (3) 12,679 5.9 Vacant Area 3,347 1.9 Vacant Area 753 2.1 Vacant Area 4,100 1.9
Total 178,842 100.0 Total 35,343 100.0 Total 214,185 100.0 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 Note : please study disclaimer in cover page of this presentation (5) Weighted average of retail rental rate upon the area of each asset 9 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
General Information Building Utilities System 3-mth Period Ended March 2013 . Has more than 500 retail outlets . Consists of : . 11 elevators; 6 passenger . Total gross area . Started the operation in 1993 • 5-storey shopping complex with elevators and 5 service elevators 174,574 sq.m. . Owned by Central Pattana 1 basement . 30 escalators . Leasable area Chiangmai Company Limited • 3-storey multipurpose hall . Fire suppression system 71,777 sq.m. . Under the management of CPN • Indoor and outdoor parking . Sprinkler system . Occupancy rate since March 1996 spaces 94.5% (1) . Located at No.2 Mahidol Road, . Located on a plot of land with . Average rental rate 252-252/1, Waulai Road, Haiya approximate area of 91 rai 1,310 Baht / sq.m./ month Sub-District, Muang District, . 3-mth Rental and Service Income Chiangmai Province 50100 Baht 230.1 million
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 10 Investment Details 30-year Partial Land Lease Investment Structure . Lease partial land where the shopping complex, the multipurpose hall, indoor parking spaces including certain parts of surrounding roads and CentralPlaza Chiangmai Airport Project 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 Building Lease
. 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: 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)
OWN OWN OWN (4) Total gross area (sq.m.) 122,991 (5) (70.5% of project gross area)
. Investment will not include the area on which Robinson Department
LAND BUILDING UTILITIES Store is located, the area under long-term lease contracts with advance SYSTEM payment for leasehold right, the area under renovation and parking spaces the Fund will not invest in.
30-year Utilities System Lease 30-year 30-year The utility systems leased are electrical system, telephone system, elevator Lease Lease (partial) and escalator systems, air-conditioning system, engineering system and other related assets.
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. Note : please study disclaimer in cover page of this presentation (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). 11 Key Term Summary
Summary of the Draft Lease of Land (Partial) and Building Summary of the Property Management Service (Partial) Agreement Agreement
The Lessor Central Pattana Chiangmai Company Limited Service Central Pattana Public Company Limited Provider The Lessee CPN Retail Growth Leasehold Property Fund Service CPN Retail Growth Leasehold Property Fund The Leased - Part of land located in Tambol Suthep, Amphur Muang Chiangmai, Receiver Properties Chiangmai Province, covering the total leased area of approximately 32-3-56.85 rai Service Fee The Property Manager is entitled to property management fees for the - Parts of building and constructions of CentralPlaza Chiangmai Airport Projection Period as stated in the existing property management Project consisting of certain parts of shopping complex, multipurpose agreement. The property management fees are divided as follows: hall and indoor parking spaces, representing a leasable area of approximately 122,991 square meters. - Fee for rental collection not exceeding 3.00% of net rental and service Income Lease Term 30 years from the date of registration of the leasehold right under this - Property management base fee at a rate not exceeding 0.30 % of Agreement Fund’s net asset value Option to In the case the Fund obtains an approval from the Office of the Securities - Property management incentive fee at a rate not exceeding 2.35% of Renew upon and Exchange (the “Office of the SEC”) to continue to invest in the net property income Expiration additional real properties or to convert the Fund into the Real Estate - Fee for overseeing the improvement and/or development of real Investment Trust pursuant to the relevant laws (“REIT”), Central properties of the Fund at the rate of 2.00% of total construction value Chiangmai agrees to give the notice regarding conditions and the value excluding design fee, advisor fee, and other professional fees. for the renewal of this Agreement to the Fund or the REIT at least nine - Leasing commission as per the following table months before the expiration date of the existing Lease Agreement. Shopping Malls Office Central Chiangmai agrees to grant the right of first refusal to the Fund or For the renewal tenants 0.5 months 0.5 months the REIT to purchase, and/or accept transfer of ownership and/or right of New Tenants Contracts < 1 year 0.5 months 0.5 months possession, and/or to lease real properties of CentralPlaza Chiangmai Contracts ≥ 1 year and < 3 year 1.0 months 0.5 months Airport Project. Contracts ≥ 3 years 1.5 months 1.0 months Contracts > 3 years and with advance 3% of upfront rent 3% of upfront rent Conditions Central Pattana Chiangmai Company Limited will be responsible for rental payments operating expense for Central Chiangmai Airport Project as per following table Conditions Central Pattana Public Company Limited will give a discount to property management fee as per the following table Oct – Dec Oct – Dec 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Discount (%) 100% 100% 75% 50% 25% 0% Discount (%) 40% 40% 30% 20% 10% 0%
Maximum Amount (THB mm) 13 62 49 34 18 0 Maximum Amount (THB mm) 11 35 31 20 10 0
Note : please study disclaimer in cover page of this presentation 12 Investment Highlights
13 Investment Highlight 1 : Strategic Location
Potential Growth in High Historical Occupancy Top Class Property Strategic Location Strong Tenants Mix Northern Area and Average Rental Rate Manager
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 14 Investment Highlight 2 : Potential Growth in Northern Area
Potential Growth in High Historical Occupancy Top Class Property Strategic Location Strong Tenants Mix Northern Area and Average Rental Rate Manager
Gateway of the North of Thailand
• 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, . Over the past three years, Chiangmai has become the most which makes Chiangmai easier to access 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. The strong economical growth in . Those coming developments reflect strong signal to the Chiangmai will substantially support potential growth capability. the growth of demand which will reflect . Chiangmai has a significant demand with a steady growth rate of in the appreciation of asset/property population. value in Chiangmai . 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 15 Investment Highlight 3 : Strong Tenants Mix
Potential Growth in High Historical Occupancy Top Class Property Strategic Location Strong Tenants Mix Northern Area and Average Rental Rate Manager
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
16 Investment Highlight 3 : Strong Tenants Mix (Cont’)
Potential Growth in High Historical Occupancy Top Class Property Strategic Location Strong Tenants Mix Northern Area and Average Rental Rate Manager
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 .
As of Q1 2013, the top 5 major tenants of the area to be To address tenants’ and invested by CPNRF include : Fashion, Health 38.8% and Beauty customers’ needs, CPN has emphasized on the merchandising mix strategy through market and customer analysis and continuously 20.3% adjusting the shops as well as Food and Drink finding new local and international retailers to modernize the shopping 15.8% complex. Rank Tenants Name Area % of total Entertainment (Sq.m) NLA (1)
1 Major Cineplex Group Plc. 5,244 14.8% 12.4% Electronics and Strong and optimal tenants 2 IT City Plc. 908 2.6% Decoration mix also helps to boost 3 Oishi Group Plc. 605 1.7% 10.6% business growth and rental Others 4 A S Watson Group 507 1.4% prices. 5 SLRT Limited – under Minor Food 406 1.1% Vacancies 2.1% Vacant 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 Remark: (1)The total NLA includes only the NLA invested by the Fund. Note : please study disclaimer in cover page of this presentation 17 Investment Highlight 5 : Top Class Property Manager
Potential Growth in High Historical Occupancy Top Class Property Strategic Location Strong Tenants Mix Northern Area and Average Rental Rate 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.
The large complex situated in the heart of Aim to match every lifestyle, fashion and Provide the shopping and entertainment Bangkok. It provides an international shopping entertainment of residences in major cities over experience with holiday spirit and local experiences. Thailand. novelty
… 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 Top Corporate Excellence Thailand Quality Class Award to enhance yield to investors Governance Report the 2nd CG Scoring in 2012 which Honored for the third . Trade at higher P/NAV among other Property consecutive year and the is the 4th consecutive consecutive years of third time since 2008 year since 2009 CentralPlaza Chiangmai Airport Funds in the market
. Office Property Fund with highest subscriber in Thailand; 17,000 subscribers
ASEAN Thailand Energy A+ Credit Rating in February 2012 . Issued at the top price range from Institutional Energy Awards 2012 Awards 2012 Bookbuilding
Note : please study disclaimer in cover page of this presentation 18 Some Key Concern and Mitigation
19 Key Concern ( see more details in item Risk Factors of fund scheme ) Potential Cannibalization and Conflict of Interest Mittigation
. Customers make decision on their rental location ( see more details in item Risk Factors of fund scheme )
. 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
CentralPlaza CentralFestival Chiangmai Airport Chiangmai Department Store Robinson Central Supermarket Tops Supermarket Central Food Hall Business unit homeWorks Office Depot Note : please study disclaimer in cover page of this presentation 20 Appendix
21 Appraisal Valuation Summary
Appraised Value Real Properties Appraisers Date of Appraisal (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
7 November 2013 10,565 The CentralPlaza Chiangmai Airport Project 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 22