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Published on February 21, 2008

The rating reflects Golden Land's accepted brand name in the high-income housing market, the company's moderate balance sheet and recurring income from its serviced apartments.

The rating takes into account the company's frequent management turnover and the cyclical nature of  the property development market.

The slowdown in demand for residential property and weak consumer confidence remain rating concerns.

The rating also takes into consideration the bank guarantees from commercial banks that are being used to replace the land and buildings previously pledged as collateral through the life of the debentures.

The "positive" outlook reflects Golden Land's success at turning non-productive assets into commercially viable properties. The company's high-rise projects are expected to be conservatively financed to maintain a target debt-to-capitalisation ratio of 50-55 per cent.

A rating upgrade is likely when Golden Land reaches the harvesting period from its investments and housing operations show signs of significant improvement.

Golden Land is a medium-sized firm that develops detached-housing projects and condominium projects for high-income home-buyers in the Bangkok metropolitan area. New World Group is the major shareholder with a 24-per-cent stake.

Golden Land owns The Ascott Sathorn serviced apartment and has a 33-per-cent ownership interest in Gold Property Fund (GOLDPF), which owns the Mayfair Marriott serviced apartment. Golden Land is developing four detached-housing projects with prices between Bt8 million-Bt20 million. Last year, it had no new condominium sales and detached-housing presales continued to slow.

From a peak of Bt5.2 billion in 2004, new residential sales declined to Bt1.08 billion in 2006 and Bt760 million for the first nine months of last year. This was due to the slowdown in the residential market and a change in Golden Land's management.

The company's serviced apartments performed favourably last year with a slight increase of revenue per available room at Ascott Sathorn of 9 per cent from Bt2,686 per day in 2006 to Bt2,926 per day in the first nine months of 2007.

Golden Land sold one of the two apartment blocks, Mayfair Marriott, to GOLDPF and received net proceeds of Bt2 billion last May.

Tris Rating said Golden Land's financial profile improved last year as a result of cash flow generated from its asset-disposal strategy.

The Nation