Golden Tree Co Ltd (GT), the real estate firm behind the Cambodia Securities Exchange’s (CSX) first “green bond”, posted total revenues of 3.024 billion riel – or $740,364 – for the first quarter (Q1) of its 2023 financial year, ended March 31, down 1.99 per cent year-on-year as the global economic downturn hammered the real estate and construction sector.

In its Q1 financial report filed to the CSX, GT booked net losses before and after tax of 1.016 billion riel and 1.045 billion riel, respectively, for the January-March quarter, compared to pre- and post-tax profits of 440.781 million riel and 411.058 million riel in the year-ago period.

The company’s EBITDA (earnings before interest, taxes, depreciation and amortisation) margin for the three-month period also dropped to 41.01 per cent from 72.10 per cent a year earlier, pointing to issues with cash flows, operational efficiency, profitability or general market position.

As of March 31, total assets, liabilities, and shareholders’ equity respectively stood at 136.943 billion riel, 114.769 billion riel and 22.173 billion riel, down 5.39 per cent, down 5.29 per cent and down 5.93 per cent year-on-year.

On the other hand, its 12-storey commercial office building VTrust Tower had an occupancy rate of 81 per cent as of March 31, which was higher than the industry average across all office types of 65 per cent, according to the report, which added that GT intends to raise its overall occupancy rate “toward 90 per cent” by December.

It said the “central- [single-] owned-office occupancy rate reached 72.7 per cent as compared to 69.4 per cent in 2022”, citing CBRE Cambodia, the local affiliate of US commercial real estate services and investment firm CBRE Group Inc.

“New office supplies are also expected to increase for the next few years,” it said, likely implying that the annual nationwide total number of office-building units becoming available for lease for the first time may rise each year in the short term.

“However, there is a clear shift toward developing strata-titled offices with account for more than 50 per cent of the future supply. Forty per cent of the total supply will be strata-title[d] by the end of [the] year.

“While strata-titled offices give the developer quick cash flow, central-owned offices are able to provide superior services to the tenants in term[s] of property management, speed of services and property maintenance,” it explained.

GT chairman Kuy Vat noted in the report that the World Bank has announced that Cambodia’s gross domestic product (GDP) is expected to expand 5.2 per cent this year, making the Kingdom the third fastest growing economy in Southeast Asia – after Vietnam (6.3%) and the Philippines (5.6%) – and 14th globally.

“GT expects this robust growth [to] improve business confidence and encourage [an] influx of foreign investments in the near future. In turn, it will increase demand for office space and [mark] the return of growth for [the] real estate industry.

“GT continues to focus on investing in additional assets to expand our growth. GT chooses to invest in quality assets – which are located [in] promising locations and are capable of generating long-term investment – that are stable,” Vat said, noting that construction work on the Amara Residence, which the company purchased in the fourth quarter of 2022, is about 90 per cent done.

The firm “is expected to launch a soft opening” for the development in the fourth quarter, he said, adding that “as of this period, our two properties were valued at $45 million, with a total leasable area of 23,436sqm.

“GT is preparing itself to meet the demand for property rental by upgrading and [maintaining] our properties to be in good condition for rents. We continue to [develop] good relationships with existing tenants, and [look for] new potential tenants,” Vat added.

Green bond

On January 19, GT listed the inaugural “green bond” on the CSX, raising 6.0721 billion riel in what has been hailed as a milestone in the development of the local bourse.

A total of 60,721 units were issued at par value of 100,000 riel, carrying a per-annum coupon rate of seven per cent paid semi-annually and a five-year tenor with maturity date of December 6, 2027, according to the CSX website, which noted that the bond was underwritten by SBI Royal Securities Plc, with Cambodia Securities Plc as co-underwriter.

In a late-March interview with The Post, Securities and Exchange Regulator of Cambodia (SERC) director-general Sou Socheat mentioned that GT’s bond carries the ASEAN Label, which attests to compliance with ASEAN Green, Social and Sustainable Bond Standards.

And according to GT executive vice-president Oum Sereyrotanak, the Asian Development Bank (ADB) provided technical assistance to ensure that the offering conforms to said standards. The multilateral development lender is headquartered within ASEAN, in the Philippines’ Metro Manila region.

The SERC’s Socheat also noted that the Kingdom is working with the UN Economic and Social Commission for Asia and the Pacific (ESCAP) and the Seoul-based Global Green Growth Institute (GGGI) under a memorandum of agreement (MoA) signed in late February to promote the issuance of securities bearing the ASEAN Green, Social or Sustainability Bond Label.

According to ESCAP, GT has been selected to receive support from the Cambodia Sustainable Bond Accelerator: Empowering Issuers through Technical Assistance programme, which is linked to the MoA, to help its ambitions of offering a second green bond, worth $25 million, “for green building development”.