ANNUAL REPORT 2020 THAILAND’S LARGEST RETAIL-FOCUSED REAL ESTATE INVESTMENT TRUST Central Rama 3 CONTENTS 03 09 11 49 SUMMARY MESSAGE OBJECTIVES, ECONOMIC OF CPNREIT FROM THE INVESTMENT AND CHAIRMAN POLICY INDUSTRY AND NATURE OF OVERVIEW BENEFIT PROCUREMENT 53 72 73 78 RISK LEGAL MILESTONES INFORMATION FACTORS DISPUTE AND OF TRUST UNITS OTHER KEY AND UNITHOLDERS MATTERS 85 118 138 139 MANAGEMENT CORPORATE CORPORATE INTERNAL STRUCTURE GOVERNANCE SOCIAL CONTROL AND RESPONSIBILITY RISK MANAGEMENT 141 151 159 160 PREVENTION FINANCIAL TRUSTEE SUMMARY OF CONFLICT STATUS AND REPORT OF OF INTEREST PERFORMANCE OUTCOMES TRUST DEED 184 FINANCIAL STATEMENTS Central Rama 3 2 ANNUAL REPORT 2020 SUMMARY OF CPNREIT As of 31 December 2020 Thai Name ท踱ัส噌์เพื่่�อกา踱ลงทุนในสิท戴ิกา踱เ⩈�าอสังหา踱ิมท踱ัพื่詌์ CPN 踱ีเทล โก踱ท English Name CPN Retail Growth Leasehold REIT Ticker CPNREIT REIT Establishment 29 November 2017 Trustee SCB Asset Management Company Limited REIT Manager CPN REIT Management Company Limited Auditor KPMG Phoomchai Audit Ltd. Market Capitalization THB 42,037.06 million Closing Price as of 30 Dec 2020 THB 19.00 per Unit Net Asset Value THB 28,043.98 million NAV per Unit THB 12.6753 per Unit Authorized Capital THB 28,551.79 million PAR Value THB 12.9049 per Unit Price/NAV 1.4989 time Weighted Average Lease Expiry 34.22 years CPNREIT was established on 1 December 2017 from the conversion from CPN Retail Growth Leasehold Property Fund (“CPNRF”). The trust units of CPNREIT were first traded on the Stock Exchange of Thailand on 14 December 2017. 3 Detail of Assets As of 31 December 2020 Project Details Pinklao Office Central Central Rama II Central Rama III Central Pinklao Building Tower A Chiangmai Airport & Tower B Location No. 160 Rama 2 No. 79, 79/1-79/2, No. 7/3-7/128, 7/129-7/221, No. 2 Mahidol Road, Samae Dam 79/4-79/33 Sathu 7/222-7/552 and 7/553, Road, 252-252/1 Sub-district, Bang Pradit Road, Borommaratchachonnani Road, Arun Wualai Road, Khun Thian Chong Nonsi Ammarin Sub-district, Bangkok Noi Haiya Sub-district, District, Bangkok Sub-district, District, Bangkok Mueang District, Yannawa District, Chiangmai Bangkok Gross Area (SQ.M.) 251,182 169,740 137,692 50,653 122,991 Leasable Area (SQ.M.) 82,961 36,477 27,656 34,389 37,405 Parking Area (SQ.M.) 98,813 90,186 66,118 44,142 Land’s Leasehold right For 20 years and For 30 years, and For approximately 15 years and expires For 30 years and expires on expires on on 31 December 2024 expires on 15 August 2025 15 August 2035/2 22 April 2044 Building’s Leasehold For 20 years and For 30 years, and For approximately 15 years and expires For 30 years and right expires on expires on on 31 December 2024 expires on 15 August 2025/1 15 August 2035/2 22 April 2044 Date of Valuation 31 December 2020 30 December 2020 30 December 2020 30 December 2020 Fair value (THB million) 24,112 11,888 3,498 728 10,287 Appraiser Quality Appraisal Siam City Appraisal Co., Ltd. Co., Ltd. Method of Valuation Income Approach Remark : /1 The registration of the leasehold rights over the real property in the Central Rama 2 (Renewal) was completed on 31 Mar 2020 and the lease term is 30 years (until 15 Aug 2055). In this regard, CPNREIT will proceed with seeking sources of funds for rental payment in 2025. /2 The right to renew the lease agreement for 2 further terms of 30 years each Project Details The Ninth Towers Unilever House Central Pattaya Hilton Pattaya Hotel Office Building Office Building Location No.333/99 and 333/101 Moo 9 No. 33/4, Rama 9 No. 161, Rama 9 Road, Pattaya 1 Road, Nong Prue, Road, Huaykwang Huaykwang, Bang lamung, Chonburi Sub-District, Sub-Distruct, Huaykwang District, Huaykwang District, Bangkok Bangkok Gross Area (SQ.M.) 70,095 49,686 95,997 30,176 Leasable Area (SQ.M.) 29,388 15,182 59,322 18,527 Parking Area (SQ.M.) 14,930 572 27,206 10,035 Land’s Leasehold right - - - Building’s Leasehold For approximately 20 years and expires on For approximately For approximately right 31 August 2037 27 years and expire on 15 years and expire on 18 April 2047 14 November 2034 Date of Valuation 30 December 2020 31 December 2020 31 December 2020 Fair value (THB million) 7,145 3,452 5,704 1,347 Appraiser Siam City Appraisal Co., Ltd. Quality Appraisal Co., Ltd Method of Valuation Income Approach 4 ANNUAL REPORT 2020 As of 31 December 2020 Investment proportion Revenue Structure DIRECT OFFICES 100 % 18% HOTEL 6% LEASEHOLD RIGHT SHOPPING MALL 100 % 76% Asset Type (Appraisal Value) Weighted Average Lease Expiry (WALE) (% of total leasehold) 35.5% OFFICES 10% HOTEL 15.6% 15.1% 17.5% 5% 5.9% 8.4% SHOPPING MALL 2.0% 85% 2024 2034 2037 2044 2047 2055 2095 Investment Structure (THB million) Debt Expiry Profile Loan Debenture Total Assets 71,577.17 (THB million) Total Liabilities 43,533.19 15,000 12,000 Equity 28,767.88 9,000 Retained earnings (Deficit) (723.90) 6,000 Debt/Total assets 32.2% 3,000 - Credit Rating by TRIS Rating AA 2021 2022 2023 2024 2025 2026 2027 2028 List of the top 5 trust unitholders as of 30 December 2020 Trust Unitholders No. of trust units % 1. Central Pattana Public Company Limited 590,521,686 26.69 2. TMB EASTSPRING Property and Infrastructure Income Plus Flexible 72,397,000 3.27 3. Government Saving Bank 68,004,833 3.07 4. Social Security Office 60,369,500 2.73 5. SOUTH EAST ASIA UK (TYPE C) NOMINEES LIMITED 52,352,308 2.37 Foreign Limit 100.00% Current Foreign Holding 9.35% Distribution Payment Policy CPNREIT shall make distribution Type of Payment 2017 2018 2019 2020 Total of returns not less than 90% of (THB per Unit) the adjusted net profit of such Distribution of returns - 1.6170 1.6230 0.2707 3.5107 accounting period and not less Capital Reduction 0.2879/1 - - 0.4712 0.7591 than 2 times per year. Total 0.2879 1.6170 1.6230 0.7419 4.2698 Remark: /1 Payment from the operation period of CPNRF from 1 Oct – 30 Nov 2017 before the conversion to CPNREIT and the operation period of CPNREIT from 29 Nov – 31 Dec 2017. 5 Detail of Tenants As of 31 December 2020 %Merchandise Mix Rental Structure (% of leasable area) DEPARTMENT OTHERS STORE CONSIGNMENT 20% 16% CONTRACT 21% TECHNOLOGY AND ENTERTAINMENT GOODS AND ELECTRONICS SERVICE 7% 18% FIXED RENT FOOD AND CONTRACT FASHION BEVERAGE 79% 21% 18% Lease Expiry Profile %Renewal Leases (% of leasable area) 35% 30% year Existing Assets Additional Assets 20% 2018 85 - 15% 2019 96 - 2020 98 95 2021 2022 2023 Beyond 2023 Average Rental Rate Revenue (Shopping Malls and Offices) THB Million 7,000 THB/Sq.m. 4,912 5,111 1,300 5,000 1,202 1,222 4,041 1,200 1,113 3,000 1,100 1,000 1,000 2018 2019 2020 2018 2019 2020 Total Rent from Sub-Lessee EBITDA Fixed Rent Variable Rent THB Million THB Million 5,000 400 3,978 4,259 4,000 3,251 105 109 3,000 200 210 217 218 2,000 1,000 0 0 2018 2019 2020 2018 2019 2020 6 ANNUAL REPORT 2020 Operation Outcome Financial figures highlights Unit 2018 2019 2020 Income THB Million 4,912 5,111 4,041 Other Income THB Million 15 30 28 EBITDA THB Million 3,978 4,259 3,251 Net Investment Income THB Million 3,578 3,756 1,538 Earnings Per Unit (EPU) THB 1.6171 1.6977 0.6949 Distribution Per Unit (DPU) THB 1.6170 1.6230 0.2707/1 Capital Reduction THB Baht - - 465 Interest bearing debt to total assets Times 0.31 0.31 0.32 Finance cost/2 Percentage 2.77 3.46 3.15 Net Cash Provided By (Used In) Operating Activities THB Million 2,833 4,210 (5,299) Net Cash Provided By (Used In) Financing Activities THB Million (3,544) (4,042) 5,951 Net Increase (Decrease) In Cash THB Million (711) 168 652 Net Assets Value (NAV) THB Million 29,995 29,701 28,044 Net Assets Per Unit THB 13.5573 13.4244 12.6753 Price / NAV Times 1.88 2.44 1.50 Dividend Yield Percentage 6.34 4.96 1.42 Market Cap THB Million 56,418 72,459 42,037 Closing price THB per unit 25.50 32.75 19.00 Remark: /1 In 2020 CPNREIT announced the distribution of returns of THB 0.2707 per unit and announced the payment inform of capital reduction of THB 0.4712 per unit. /2 Financial cost excluded interests form lease liabilities (average) Borrowings and Debentures at year ended 2020 Amount Maturity Interest Rate Maturity Borrowings Debentures (THB Million) (Years) (Percentage) Date 1. Lender Financial institutions CPNREIT218A 2,650 3 2.70 17 Aug 2021 Amount (THB Million) 6,985 CPNREIT288A 7,390 10 3.80 17 Aug 2028 CPNREIT212A 2,700 2 2.54 8 Feb 2021 2. Lender Financial institutions CPNREIT232A 1,795 4 3.30 8 Feb 2023 Amount (THB Million ) 1,539 Total 14,535 More information is available in the 56-REIT1 on www.sec.or.th or www.cpnreit.com 7 Central Chiangmai Airport 8 ANNUAL REPORT 2020 MESSAGE FROM THE CHAIRMAN Dears Trust Unitholders In the 2020 operation of CPN Retail Growth Leasehold REIT (CPNREIT), the REIT Manager recognized the implications of the COVID-19 outbreak which began in late 2019 and then spread to countries around the world, including Thailand.