Logo of Phnom Penh Post newspaper Phnom Penh Post - Green bond issuer Golden Tree posts low earnings in Q2

Green bond issuer Golden Tree posts low earnings in Q2

The VTrust Tower in Phnom Penh. PHOTO SUPPLIED
The VTrust Tower in Phnom Penh. PHOTO SUPPLIED

Green bond issuer Golden Tree posts low earnings in Q2

Cambodia's first green bond issuer Golden Tree (GT) reported slow growth in business performance in the second fiscal quarter of the year amid a slowdown in economic activities, which affected the real-estate and construction sectors.

According to its filing with Cambodia Securities Exchange (CSX), as of June 30, 2023, revenue fell 18.9 percent to 2.6 billion riel from 3.1 billion riel last year, while net profit declined 49.2 percent year-on-year to 552.6 million riel against 370.3 million riel.

The company’s total assets amounted to 139.8 billion riel as of June 30, 2023, down from 144.7 billion riel as at end-December last year.

GT chairman Hong Uy said the company accomplished “solid financial performance” in the second quarter. Occupancy rate of its properties was 77 percent compared to the industry average of 65 percent for all office types.

“For 2023, GT looks forward to making progress in leasing, increasing the tower’s occupancy and upkeep of its value through additional investment in facilities and amenities. GT is [also] opening an international coffee shop in the lobby of the tower to provide our tenants with a relaxed environment to meet, work and socialise within the tower’s community,” he said.

Meanwhile, Hong Uy pointed out that construction of Amara Residence has “progressed well into the final phase”, with a soft opening planned in the fourth quarter of 2023.

It is in the process of furnishing rooms on several floors and completing the construction of building amenities such as the garden, swimming pool and gym in order to provide early bird tenants the “best experience possible”.

“For this year, GT continues to proactively identify opportunities to crystallise our building’s value and improve our balance sheet. We continue to provide quality space and focus on operational excellence supporting the real estate needs of our tenants.

“We believe our strong tenant relationship, clear strategies and implementation plans will help us grow sustainably in the future,” Hong Uy said.

Quoting National Bank of Cambodia (NBC)’s forecast, GT said the economy is expected to grow at 5.5 per cent in 2023, with an expected yearly inflation rate at two per cent.

The economy is expected to grow further to 6.2 per cent in 2024, thanks to stronger projected growth in the tourism and service sectors, which is mostly due to China’s reopening.

In the first five months of 2023, Cambodia received more than 2.2 million international tourists, a year-on-year increase of 530 per cent.

Additionally, foreign direct investment reached $45 billion as of March 31, 2023, up nine per cent from the same period last year.

“Among foreign investors, China topped the list at approximately $20.6 billion while the real estate and construction sectors attracted around $6 billion,” GT stated.

Looking at the real estate industry, the company noted that there has been a positive development in the office sector, with occupancy rate at 73 per cent as of June 30, 2023 for central-owned offices compared to 69.4 per cent in 2022.

New office supplies are also expected to increase in the next few years, however, there is a clear shift towards developing strata-title offices which account for more than 50 per cent of the future supply. “By the end of this year, 40 per cent of the total supply would be strata title units,” GT said.

Meanwhile, the serviced apartment market has seen a positive recovery in 2023. The return of former tenants, who left during the pandemic, were one of the key factors driving the rental rates’ recovery, it shared.

The adoption of the environmental, social and governance (ESG) practices has been on the rise. Commercial buildings are no exception. According to CBRE, green is now considered a table stake for most institutional investors.

“As a result, the pressure is imminent on building owners and its tenants to meet ESG goals,” GT opined.

The company said its VTrust Tower received the green certificate in 2022 and is currently doing a feasibility study to convert Amara Residence into a green building. “The project is expected to be completed by the end of 2024.”

On January 19, 2023, GT officially listed its first green bond on the CSX, raising 6.1 billion riel ($1.46 million) to expand its business, in what has been hailed as a milestone in the development of the local bourse.

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