Central Pattana Pcl is open to acquiring assets that fits well with its strategy of housing retail, residential and office spaces at a single location as the mall developer pushes ahead with a 135 billion baht ($3.9 billion) expansion.
(Bloomberg) — Central Pattana Pcl is open to acquiring assets that fits well with its strategy of housing retail, residential and office spaces at a single location as the mall developer pushes ahead with a 135 billion baht ($3.9 billion) expansion.
The operator of Central World, Bangkok’s largest shopping mall complex, is always looking for asset purchases, be it brown, greenfield or new industry projects, Central Pattana’s President and Chief Executive Officer Wallaya Chirathivat said. The developer will also look to transfer more assets to real estate investment trusts to raise funds for expansion, she said.
The company, founded by the billionaire Chirathivat family that also runs Central Retail Corp. and co-owns Selfridges & Co., is spending 135 billion baht under a five-year plan, to increase the net leasable retail area by 17% to 2.7 million square meters, an eightfold increase in hotel rooms and more than doubling the number of residential projects to 90 by 2027.
The five-year capex plan excludes any mergers and acquisitions and is subject to changes, according to the company. Central Pattana acquired companies including Siam Future Development Pcl and Grand Canal Land Pcl the past five years, while also investing in Dusit Thani Pcl and forming a joint venture with Hong Kong Land Holdings Ltd.
“We are looking for all kinds of opportunities,” Wallaya, 61, said in an interview. “Mergers and acquisitions have to enhance our existing business. If it’s a new industry then it has to be within our ecosystem or create synergy among the premises of our business.”
Central Pattana’s mega projects will span over five to ten years, with each comprising over 350,000 square meters at investment of more than 20 billion baht each, Wallaya said. Dusit Central Park, a 46 billion baht joint venture with Dusit Thani, is one of the mega projects, while details of the others will be divulged gradually, she said.
Central Pattana, which has already seen its revenue return to pre-Covid level due to a recovery in tourism and lower rental support to its tenants, will benefit from the expansion as it will drive its profit, according to Bloomberg Intelligence analysts Ken Foong and Siti Nur Fairuz Khalil. The investment will help the company meet its guidance of 14% to 16 % average annual revenue growth over the five-year period, they said in a report.
Central Pattana shares were 0.8% lower at 66 baht by 4:37 p.m. in Bangkok, extending losses to 7% this year, according to data compiled by Bloomberg.
The better-than-expected in global travel is helping Central Pattana fill up its hotels and increase footfalls at its shopping malls. And the upswing in tourism without the Chinese — the largest group of visitors to Thailand pre-Covid — is remarkable, Wallaya said.
The recovery for Central Pattana, a proxy for retail sector recovery, could get better with the Chinese returning in large numbers later in the year, Wallaya said. Russian tourists, the second-largest group of visitors in recent months, are “one of the top spenders” in shopping centers located in resort island Phuket province, she said.
The company has zeroed in on Malaysia and Vietnam for overseas investment and plans to replicate the retail-led mixed-use development initiative. Cultural similarities, trade linkage and consumer behavior are among the factors which prompted Central Pattana to consider investments in the neighboring countries, Wallaya said.
“Vietnam is an important market that we would like to explore despite many regulations we have to overcome. Hopefully, we will announce something on Vietnam by the middle of this year.”
(Updates with shares in eighth paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.