Posted on 11:11 PM, January 25, 2010 [ BusinessWorld Online ]
REAL ESTATE firm Ortigas & Co. is in the process of turning itself into a holding company, planning the creation of four new firms that will handle its assets and eyeing an eventual listing at the stock exchange.
Documents filed with the Securities and Exchange Commission show that a new company, Circulo Verde Development Corp., has been incorporated to handle Ortigas & Co.’s 12-hectare Circulo Verde property in Quezon City.
Circulo Verde will become a wholly owned subsidiary with an authorized capital stock of P4 million. Its major shareholders include Ignacio R. Ortigas, Francisco M. Ortigas III and Fernando M. Ortigas.
Rex C. Drilon II, Ortigas & Co. Ltd. chief operating officer, said the new firm would be one of four major companies the group planned to establish.
The others, he added, will handle one of three projects -- the 10-hectare Capitol Commons along Shaw Boulevard in Pasig City; the redevelopment of the 16-hectare Greenhills Commercial Center, and the 18.5-hectare Frontera Verde whose anchor locator is Tiendesitas.
"This is part of the corporate restructure of Ortigas & Co. to give the company the flexibility to grow in the future through its wholly-owned units," Mr. Drilon said, adding that it will be easier for the group to list its assets under the Real Estate Investment Trust law should it decide to do so.
Following the reorganization, Ortigas & Co. will become a holding company with a three-hectare property in Ortigas Center as its major asset. This, Mr. Drilon said, will pave the way for the 79-year-old firm to "take the natural progression that most companies took."
He said the establishment of the four units would be part of a "transition period" that will pave the way for Ortigas & Co.’s transformation into a corporation from a partnership, joining other old conglomerates like Ayala Corp. in the local bourse.
"This has been in discussion for eight years and we are taking things slowly. Given the prospect of the local economy and the increasing competitiveness in the property industry, Ortigas & Co. felt the need to come up with a corporate structure without exposing the major shareholders to possible risk," he said.
Mr. Drilon said Ortigas & Co. had previously not felt the urgency to transform itself into a corporation, but increasing competition in the property industry forced a rethink. Ortigas & Co.’s nature as a partnership, he added, had held back growth.
"We have to allow the [projects] to grow without exposing the shareholders’ direct and personal [assets] to the risk [that we might encounter along the way]," he said.
The Ortigas real estate business traces its roots to the 1920s when the Augustinian Fathers sold 4,033 hectares to Dr. Frank W. Dudley and Don Francisco Ortigas. In 1931, Ortigas, Madrigal y cia., S. en C. was incorporated as a limited partnership with the sole purpose of acquiring the Hacienda de Mandaloyon, which spanned the municipalities now known as Mandaluyong, San Juan, Pasig and Quezon City.
The Madrigals withdrew in 1956 and the partnership’s name was correspondingly amended to Ortigas & Company, Limited Partnership. Among its finished projects is the high-end Wack-Wack subdivision in Ortigas Center.
Asked when Ortigas & Co. would be joining the bourse, Mr. Drilon said "when the market is already ready for a company like Ortigas." -- Kristine Jane R. Liu
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