PROPERTY / SHOPPING CENTRES

Central adamant about keeping Lat Phrao branch

PITSINEE JITPLEECHEEP

The Central Group, the country's largest retailer, is determined to maintain control of its Central Plaza Lat Phrao shopping complex and remains hopeful of a successful lease renewal for the site with the State Railway of Thailand. ''We have confronted many threats and fought for Central Lat Phrao with our blood and soul. We're dedicated to maintaining the site within our shopping portfolio,'' said Kobchai Chirathivat, the president of Central Pattana Plc, the listed development arm of the Central Group.

Central Plaza Lat Phrao is the group's largest retail revenue producer although it expects that CentralWorld at the Ratchaprasong intersection will soon become its new flagship.

Central's 30-year lease contract for the site with the State Railway of Thailand (SRT) expires in December 2008.

Yuwadee Chirathivat Bhicharnchit, the president of Central Department Store Co, welcomed the interim government's policy to ensure full transparency in the negotiations for the site.

''We don't have a contingency plan, as we are quite confident of renewing the contract,'' she said.

Under the current contract, the existing leaseholder has the first right to negotiate for an extension.

Mr Kobchai noted that the group could renew the contract for another 10-year term, up to a maximum of two terms, under the existing contract.

He insisted that under the new contract, the SRT stood to reap bigger returns, with the renewed annual lease fee in the hundreds of millions of baht, as the new contract would cover both land and building leases, instead of only land under the original 1978 agreement.

According to the international real estate firm CB Richard Ellis, the value of Central Lat Phrao was around eight billion baht in 2004, compared to 80 million baht 30 years ago, for the 44.22-rai plot.

The Lat Phrao location is categorised as a mid-town area where the rental rates for retail space are about 1,500 to 2,700 baht per square metre per month. Other mid-town areas include Ramkhamhaeng, Pin Klao, Bang Kapi, Phahon Yothin and Wang Burapha.

Rental fees of 1,800 to 3,000 baht per sq m are charged for downtown sites and 1,200 to 2,500 baht for stores upcountry.

Asked what the group planned to do if a new bid was called for the site, Mr Kobchai said the company was ready to enter the bid if necessary.

''If we have to enter the bid, the government will also have to revise the lease contracts of the Queen Sirikit National Convention Centre and another shopping centre with a state agency. Both lessees have already renewed their agreements, whose terms are similar to ours, with the government,'' said Pandit Monkolkul, executive vice-president for corporate finance of the Central Group of Companies.

Mr Pandit explained that based on the interim provision of the Public-Private Joint Venture Act, the provisions under the act were not retroactive.

He pointed out in this particular case, the next step was to negotiate remuneration and other benefits with the SRT so that a new bid would not be necessary.

Under Article 13 of the Act, the SRT has to set up a committee to supervise the contract-renewal process.

Mr Kobchai said the SRT had already set up such a committee, but the company had yet to start negotiations, possibly because the committee was in the process of selecting a neutral body to appraise the land's value.

''We hope everything will be concluded by the end of this year under this interim government,'' said Mr Kobchai.

He added that if Central managed to retain the site, it would spend at least 500 million baht to give Central Plaza Lat Phrao a facelift.

Shares of CPN closed yesterday on the SET at 24.50 baht, up 20 stang in trade worth 10.26 million baht.

Bangkok Post

Last Updated : Wednesday April 11, 2007