SET-listed Central Pattana (CPN), the property arm of Central Group, has earmarked capital expenditure (capex) of 17 billion baht for new development projects.
Naparat Sriwanvit, senior executive vice-president for finance and accounting, said the company plans to use the 17 billion baht to develop three mixed-use commercial projects comprising retail spaces and condominium projects in major provinces, as well as to buy more land banks.
The budget includes construction projects worth 8 billion baht, renovation projects worth 2.5 billion, 5.1 billion to buy land banks, and 1.7 billion for residential condo project development.
The capex will mainly come from its internal cash flow to control its net debt-to-equity ratio at not exceeding one time. It is 0.3 times now, she said.
"We have cash on hand of 15-16 billion baht to finance this year's development plan. The rest will come from our conversion of the CPNRF property fund to a real estate investment trust [REIT] fund," said Ms Naparat.
The company is studying the viability of selling more CPN property assets to the REIT after CPNRF has been converted to a REIT in the second half this year.
CPN previously announced its three-year business plan from 2016-18, which called for opening five new developments, including CentralPlaza Nakhon Si Thammarat, which opened last July, as well as renovating five stores.
The company is also ready to invest abroad through mergers and acquisitions, she said.
Central i-City, the company's first overseas mall worth 8.3 billion baht, is slated to open in Malaysia in 2018.
"If we have the opportunity to purchase new projects we are ready to spend more than the capex earmarked," said Ms Naparat.
The company recently partnered with the Dusit Thani Plc, a leading hotel and property development company, in a landmark mixed-use project at the current location of Bangkok's iconic Dusit Thani Hotel in Sala Daeng. It will feature a hotel, residences, retail areas and offices with a large green space. The estimated project value is 36.7 billion baht, 60% of which will come from Dusit Thani and the rest from CPN.
CPN projects revenue growth of 6-8% this year. The company reported revenue of 30.1 billion baht in 2016, up 13.1% from 2015, and net profit of 9.24 billion baht, a gain of 17.3%.
Ms Naparat said the new focus on mixed-use spaces rather than retail only is not a coincidence. The change is to cope with the rising trend of online shopping, as there will be less demand for retail space in the future.
"We have to design concepts that could serve those shopping online, such as providing proper space for pop-up stores," she said.
By 2018, CPN plans to operate 34 malls including the Malaysian project, but excluding the new partnership project with Dusit Thani. It operates 30 malls now.
CPN shares closed yesterday on the SET at 56.50 baht, up 50 satang, in trade worth 447 million baht.