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Megaworld sees lift from rentals

Saturday, June 20, 2009 [ manilatimes.net ]

By Chino Leyco, Reporter

The property arm of Alliance Global Group Inc. (AGI) said it expects higher revenues from its rental space business even as it projected slower earnings growth this year.

Kingson Sian, Megaworld Corp. executive director, said leasing revenue is expected to post a 54-percent increase from P1.3 billion to P2 billion this year. However, profit growth would be slower at 5 percent to P4 billion from P3.8 billion last year.

In 2008, Sian said the company posted a 25-percent increase in profits from P3.03 billion a year ago.

“Last year for us was a great year—this was the best year in our 20-year history. It’s hard for us to compare with last year. Now, I don’t know what the competitors are doing, but for now we’re still very positive because it is seen that we will exceed our 2007 numbers,” Sian told reporters.

This year, the Andrew Tan-led real- estate company is setting aside P8 billion to P10 billion for capital expenditures, primarily on its middle-income and business process out-sourcing (BPO) markets.

Megaworld would be launching five new projects within the 50-hectare McKinley Hill in Fort Bonifacio this year. Once the five projects are completed, Sian said this would generate P12 billion in revenues.

“In terms of reservation sales, it will be slower than last year but it will exceed our 2007 figure. When there is a crisis [buyers] try to move out a little bit,” Sian added.

Besides the middle-income and BPO markets, the AGI executive also said the company is beefing up its tourism projects, which would be additional sources of revenue.

Megaworld is scheduled to complete the Marriott Hotel in its 25-hectare Newport City development at the Villamor Airbase in Pasay City, near the Terminal 3 of the Ninoy Aquino International Airport.

The 365-room five-star hotel will be owned and operated by the lodging company Marriott International Inc.

Aside from Marriott, Sian said Megaworld is also building the six-star Maxims Hotel in Newport City that will be completed and operational by next year. The company also plans to expand its wholly owned Richmonde Hotel by building another one in Eastwood City, in Taguig City and in Binondo, Manila.

To fund all these projects, Megaworld will be earmarking P30 billion for capital expenditures until 2010.

In the first quarter of the year, Megaworld’s profit dipped to P1.02 billion from P1.03 billion in the same period last year due to weak sales of condominium units. Its consolidated revenues declined by 6.22 percent to P4.38 billion from P4.67 billion in the same period last year.

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