Central Pattana News

Posted on January 18, 2007 by admin

Central Lat Phrao lease extended - Bangkok Post, December 12, 2008

Tensions looming as Central's lease of SRT land is set to expire - The Nation, April 16, 2007

...Despite Central Group's claim that its offer is the best for a plot in Central Lat Phrao, the State Railway of Thailand (SRT) can still squeeze it for more if the 30-year lease to the private company is to be renewed.
From whatever angle, the SRT has received too little from leasing the 47.22-rai area to Central Group, and it is time the state agency found a way to maximise the possible returns from the commercially lucrative plot... Central Pattana awarded 30-year lease - The Nation, February 23, 2007
According to the statement released by the bureau yesterday, CPN's proposal for developing the site met its design and concept criteria for creating a landmark and a true centerpiece attraction for Bangkok. The plan maps out a complex, including world-class shopping facilities, offices and a hotel... Lat Phrao decision due by April - Bangkok Post, January 18, 2007
...The Central Group currently leases the SRT-owned plot on Phahon Yothin Road where Central Lat Phrao shopping centre and the Sofitel Central Plaza hotel are located. The 30-year lease contract is due to expire in December 2008...
Central Pattana Plc, which derives about 15% of its revenue from the Lat Phrao operation, said it had not received any information on the extension, although it has set up a team to study possible areas for renovation in the event that the SRT approves its request...
An SRT source said Central Pattana had submitted a letter to the SRT around seven years ago, inquiring about a possible extension of the lease contract.
It was reported that the company sought an extension for another 30 years and proposed an additional investment and development plan.
But previous governments had not put the matter on the table. They just planned to engage a private company to appraise the property. Now, six qualified firms have been invited to offer proposals.
A source at the Transport Ministry said the Central Group had asked the previous government to consider the extension of the contract.
But some members of the former SRT board, who had connections with politicians, tried to delay the process by seeking written comments from other agencies concerned and the Office of the Attorney General.

CentralWorld on course to claim crown as largest mall - Bangkok Post, June 9, 2006
CentralWorld will become the largest mixed-used shopping centre in Bangkok when it opens on July 21. About 85% of the lifestyle retail complex will be ready on that day, while the remaining areas, including Zen Department Store and a nearby zone, will be completed in December. ...
CentralWorld has a total project space of 830,000 square metres, which comprises the shopping complex (550,000 sq m), a five-star hotel with 500 rooms, a convention centre over 17,000 sq m, a 45-storey office building covering 80,000 sq m and an indoor parking space for more than 7,000 vehicles.
The office tower has been completed while the convention centre is due for completion in 2006 and the hotel in 2008.
Currently, the 15-billion-baht Siam Paragon, which is located next to Siam Discovery and Siam Centre in the Pathumwan area, has total space of 500,000 sq m. SRT reaches agreement with vendors over rents - Bangkok Post, May 8, 2006
...Meanwhile, the arbitration panel has ruled that the lease contract for the 47.22-rai plot of land currently occupied by the Central Lat Phrao shopping complex and the Sofitel Central Hotel is now worth more than one billion baht, and it should therefore be converted into a joint venture between the state and the private sector. Under the law, the company is required to equitably share the benefits with the SRT.
...Central Group has leased the site from the SRT since 1978 to develop a hotel and shopping complex. Under the 30-year contract, it has the right to renew the lease after the contract expires on Dec 18, 2008...
(Photo: 2Bangkok.com)

Latest from the Crucible of Construction - November 7, 2005
The tiered steps have been removed from the Central World Plaza and the entire facade is being reconstructed. A rendering of the end result is here. More on Bangkok's Crucible of Construction
(Source: centralpattana.com)

New landmark - August 3, 2005
Several readers asked what is being built in the big hole at Rajaprasong intersection (pictured here - Central World Plaza at Rajaprasong Intersection). Above is a rendering of what will eventually be in there--Central's new shopping center--Central World Plaza. The glass facade will be 665 metes long and include several more giant TV screens.
This is to provide Central Pattana a new core facility to possibly replace the aging Central Lat Prae facility which accounts for 27% of Central Pattana income. SRT has repeatedly rejected Central Pattana's overtures for a lease renewal in 2008. The upgraded Central World Plaza will give Central the leverage it need in bargaining with SRT and allow them to abandon the facility as a last resort.
More on Bangkok's Crucible of Construction - Central Pattana's website


(Photo: 2Bangkok.com)

7:42pm, December 31, 2003, New Year's Eve, Bangkok
The Central World Plaza (formerly World Trade Center) is one of the main areas where people gather for the new year's eve countdown.
SRT to take over Central Lad Phrao unless new rental rates are paid - translated and summarized from Manager Daily, June 20, 2005
SRT is asking Central Pattana to pay at least 10 times the current rate of leasing if Central Pattana is to keep Central Lad Phrao within their portfolio. Otherwise, the newcomers are waiting to grab Central Lad Phrao in a second. This negotiation with Central Pattana has to be done by the end of 2006 before the lease expires in 2008. SRT subsidiary is going to run Central Lad Phrao with the joint venture with the private sector which can be Central Pattana if they are willing to pay the new leasing rates.
Nevertheless, SRT is going to ask a third party to make an assessment on the market rates of SRT land at Central Lad Phrao before making further negotiation with Central Pattana.
On the other hand, SRT is going to take over Chatuchak Weekend Market since BMA refuses to pay the outstanding debts after introducing new rates.
The New Nationwide SRT Land Development Plan will be submitted to the Treasury Department by the end of June 2005. The land not related to SRT's core business will be transferred to the Treasury Department while Bangsue and Makkasan will be run by SRT's subsidiary that is going to run Central Lad Phrao as well as Chatuchak Weekend Market.
The revenue from the new SRT land development will go to pay 42 billion baht debt. The contract with the Treasury Department states that most of SRT land handled by the Treasury Department would have the lease period of 30 years.
SRT would run SRT land development for the section not transferred to Treasury so that SRT would have more revenue to spend on the railway investment such as
1) new locomotives to replace the good old GEK and familiar ALSTHOM
2) nationwide track rehabilitation which require a new fleet of vehicles to compact and wash the ballast, the 100 lb welded steel rails, and the concrete sleepers
3) installation of modern signal and telecom systems
4) The new lines which have been waiting for construction for more than 60 years
The SRT land that will not be transferred to the treasury:
1) Central Lad Phrao
2) Chatuchak Weekend Market
3) Bangsue Center and Second City Air Terminal
4) Makkasan Center and First City Air Terminal
Makksan is still the main maintenance center even though some heavy machines and even the facility for the local assembly of electrified rolling stocks may be moved to Ban Phachi to allow SRT getting a generous BOI investment package.
More on Thai Railways - SRT
Wal-Mart, The Mall eye Lat Phrao site - The Nation, March 21, 2005
SRT rejects Central lease extension - translated and summarized from Than Setthakij, March 18-21, 2004

[Ed.: After reading this, it is easy to see how taking over the former World Trade Center was a good strategic move for Central Pattana.]

SRT rejects the plan from Central Pattana PCL to extend the lease of Central Ladphrao for another 10 years since the assets of Central Lad Phrao are already worth more than 5 billion baht thus the joint venture act is applied. After the lease expires on December 18, 2008, SRT will nationalize Central Lad Phrao. Central Pattana can only come up with the group of directors to manage Central Lad Phrao and ensure profitable returns at the exchange for the annual fees to hire those managers.
The largest source of income and profits for Central Pattana PCL is Central Ladphrao:
Central Ladphrao - 27%
Central Pinklao - 19%
Central Rama 2 - 14%
Central City Bang Na - 11%
Central World Plaza - 10%		 Central Rama 3 - 7%
Central Chiangmai - 6%
Central Pattaya - 4%
Central Ram Indra - 2%
Other old branches (Wang Boorapha, Chitlom, Silom, Lad Ya) - 1%

Commentary: With the MRTA Subway and the busy transportation on Phaholyothin Road, Central Lad Phrao is the dearest branch of all branches of Central Department Stores.
Even after the 6 year mass transit system has become a reality, Ram Indra and those old branches such as Wang Boorapha, and Lad Ya will be reinvigorated (Central Chitlom and Silom are already connected with Skytrain Stations and Central World Plaza will follow very soon). Central City Bang NA, Central Rama 2, and Central Rama 3 are too far away from the mass transit lines. Only the 2nd phase expansion of mass transit system will reenergize those branches in Thonburi to compensate for the [potential] loss of Central Ladphrao. Expect to see protracted court fighting until the final verdict from the Supreme Court.
Central Pattana hikes rental rates to finance Central World Plaza - translated and summarized from Dialynews, March 19, 2004
Mr. Narit Choeiklin (Deputy Director of Financial and Accountant section, Central Patthana PCL) said the new rental rates will be increased 6-7% for short term leases from the current rate of 1,200 baht/sq-m to fit into the improving economic situation.
Furthermore, the ratio between shorter leases and longer term leases will be changed from 70:30 to 80: 20 since short term lease rates can be adjusted much easier than the long term lease rates.
This lease readjustment will be used to finance the investment of 3.5 billion baht -> 3 billion baht for Central World Plaza Expansion Project and the other 0.5 billion baht for expansion of other branches and projects:
100 million baht for Central City Bang Na
100 million baht for Central Jusco Ratnathibet (taking over from Jusco (Thailand))
300 million for new investment in the following projects:
1) Central Rama 9 (the total investment for Central rama 9 will be 3.4 billion baht which include a subway connection)
2) Central Festival (either Khonkaen or Chonburi with total investment of 1.2 billion baht)


(Photo: 2Bangkok.com)

The new giant screen at Central World Plaza - March 15, 2004
In a further bid to make the Central World Plaza a magnet for mass gatherings in Bangkok (like on New Year's Eve), a massive screen is being erected at the north end of the plaza. In the photo below note the workers climbing on the side of the screen for scale.
Bangkok boasts biggest outdoor ad screen - Asia Pacific Media Network, April 2, 2004
...Located at the Central World Plaza, the 350,000-pixel LED (light-emitting diode) board measures 132 square metres, more than three times larger than the 40-sq m screen installed by iTV at the Shinawatra 3 Building on Vibhavadi Rangsit Road, which was the largest to date. Installation of the screen and broadcasting system cost about 200 million baht.
More about this area: Bangkok's Crucible of Construction


(Photo: 2Bangkok.com)

Central Pattana seeks to expand the Lat Prao branch into Hor Wang High School area - translated and summarized from Prachachart Thurakij, September 29-October 3, 2003
Central Pattana is definitely wants to keep the 47.22-rai of land that houses Central Lat Prao in their portfolio since this branch is the main money maker for Central Pattana. Therefore, Central Pattana agreed to pay SRT 540 million baht as a fine (they already paid 162 million baht) until the end of contract in 2008.
Even though Central Pattana agreed to extend their lease by at least 10 years and pay more rent to SRT, it will take time to conclude the deal due to the Joint venture Act of BE 2535 which is waiting for the decision from the Council of State which will come by the end of 2003.
However, one proposal from Central Pattana has ignited a firestorm of protest from Hor Wang High School [the branch of Triam Udom Suksa - the best High Schools in Thailand - and a neighbor to Central Lad Prao]. The high school will have to move to another place to make a way for land development by Central Pattana and the move of Hor Want Road northward as a new border line to the site.
Hor Wang School is on 23-rai of SRT land [23 rai 1 ngan 30 square wah to be exact] to build a school without paying rent. Therefore, SRT and Central Pattana are asking Hor Want to move to another place to allow commercial development before the ending of the lease on December 18, 2008.
Such an action from their landlord and neighbor have come as a big shock to students, teachers, the headmaster, alumni, and the parents association of the school.
SRT is now trying to squeeze those who postponed their lease payment to revenue by 965 million baht in 2003, 1.056 billion baht in 2004 and 1.143 billion baht in 2005.
As long as Thai Rak Thai is still in power, Central Pattana will have to pay SRT more (including the plan to get more land from Hor Wang School) in exchange for a very auspicious land plot. 90% of lease revenue comes from Lad Prao Branch even though Central Pattana has moved their base to Central World Plaza at Ratchadamri. It will take time for that location to be at par with Central Lat Prao since Central needs to invest 2.6 billion baht for Central World and another 4.6 billion baht for the 51-floor building. Central Rama 9 needs at least 2-3 years to be ready for opening.
In 2001, Central Lat Prao got 1145.84 million baht revenue:
- Central Pinklao - 660.77 million Baht
- Central Ratchada-Phraram 3 Branch - 510.25 million baht
- Central City Bang Na - 314.54 million baht
- Central Festival Center [Pattaya] - 146.73 million baht
- Central Airport Plaza [Chaingmai] 128.44 million baht
- Central Ram Indra - 78.93 million baht
- Langsuan Coronet - 13.52 million baht revenue
After receiving the news from Central Lat Prao that their school must move, teachers from Hor Wang said "Our 4500 alumni will give lots of hell to Central Lat Prao-- If Central Pattana is really serious about the land grab, we'll have a serious discussion... "
Hor Wang school was founded in 1966 as Bagnkhen Witthaya School, and changed to Hor Wang School in January 31, 1968. This school now produces 4300 high school graduates--running from Grade 7 to 12--without a lease from SRT, but allows children of SRT workers and officers to study there as a benefit for SRT workers.
During the rumor about a new parliament at Railway Park, Central Pattana also proposed a new Hor Wang school to replace the Railway Engineering School near the SRT golf driving course. The Railway Engineering School would be moved to Kanchanaburi.
Hor Wang also asked SRT in early 2003 to find the new place for the school since the area is so congested and they need at least 10 rai more [a total of 33-34 rai] for the school. Central Pattana would pay for the construction of the new school. However, SRT cannot allocate a new place yet.

SRT and Central Lat Prao - December 16, 2002

[Ed.: If you are interested in this kind of land use issue, you will also like this page: What happened to the subway depot development plans?]

Was Central Lat Prao really built on a garbage dump? The government has been attacking the SRT (State Railways of Thailand) for corruption recently and mention of the Central Pattana/SRT's land deal came up in Business Day. The article mainly discusses alleged lease violations, but this is the first allusion 2B has seen in the English-language press about the SRT "dirty land deal." If you have visited Central Lat Prao, you are actually visiting the "new" Bangkok Railway Station. SRT expropriated the land for this purpose, but instead leased the land to Central Pattana--resulting in landless farmers who gave up their land for the "good of the country," but ended up destitute.

The deal was so notorious it resulted in a specific article in the 1997 Thai Constitution prohibiting expropriations being used except for public utility and related matters. This issue came up last year when MRTA (the subway company), attempted to develop some of the land they expropriated to be a shopping center and residents complained that this would be prohibited by the Constitution.
More about SRT irregularities is featured prominently in The Nation and the Bangkok Post (the Post article has an amazing list of peculiar purchasing incidents by the SRT). Considering the distracting corruption scandals the government has had to endure recently, attacking the SRT (widely acknowledged to be an inefficient and corrupt agency that no one wants to defend) may be a quick and easy way to show the government is being tough on corruption.

UPDATE: Central threatens to pull out ("When the group rented the land three decades ago from the SRT, the area was only a garbage dump. We have helped the area grow into a developed community,'' Mr Suthikiati said.).

And yet more: Inspectors measure Ladprao works (which includes the incredible detail that an SRT governor actually got down on his knees to take measurements at one stage...) and a skeptical editorial from the Post saying the same thing 2B mentioned above several days ago--that these attacks on the SRT appear to be designed to show that the government is tough on corruption.

Central Pattana close to buying World Trade Center - Business Day, November 13, 2002
The troubled property appears to have a buyer: Wang Petchaboon, owned by the Wanglee family, halted construction of the office tower after Thailand's 1997-1998 financial crisis, which prompted Siam Commercial Bank and other creditors to cut lending for the World Trade Center complex. The company planned to open a shopping mall, office building and a hotel on the site.... Naris said the government should step in to promote Rama I road, along which many giant shopping centers such as World Trade Center, Siam Paragon, Siam Discovery, Siam Square and Maboonkrong are located. ... Asked about impact of having so many shopping malls on the same street, Naris said that he did not see any negative effect.
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