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SEC okays FLI's P3-billion retail bond issue


By Zinnia B. Dela Peña (The Philippine Star) Updated February 05, 2010 12:00 AM

MANILA, Philippines - The Securities and Exchange Commission has approved Filinvest Land Inc.’s registration of an additional P3 billion worth of fixed-rate retail bonds.

FLI, however, has postponed its planned bond issuance since it would be cheaper for the company to finance its projects by drawing on its bank lines and rediscounting part of its P6 billion unrediscounted receivables.

FLI said the company’s “internal cash generation is very strong, reducing the need for such debt funding at this time.”

The planned additional P3 billion bonds had similarly been assigned the highest rating of PRS Aaa by PhilRatings.

Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.

FLI earlier issued P5 billion bonds comprising P500 million due in 2012 and P4.5 billion due in 2014. The first bond series was assigned a rating of PRS Aaa in October 2009.

The rating took into consideration the following key considerations: strong growth of FLI’s real estate and leasing operations; its improving cash generation; conservative debt position; and financial flexibility.

The rating also reflects the following factors which were considered when the PRS Aaa rating was assigned to FLI’s P5-billion bond issue last October 2009: FLI’s diversified portfolio; focus on the mass housing segment which enhances FLI’s resilience; and favorable industry conditions.

Despite having to face a more challenging environment brought about by the global financial crisis and relatively weak GDP growth in the country, FLI’s revenues for the first nine months of 2009 were generally unchanged from the same period for the previous year.

The slight drop in real estate revenues, brought about by the overall decline in high-end property sales experienced industry-wide, was offset by the slight increase in FLI’s rental income. Although expenses were slightly higher, net income managed to register a 4.2 percent increase as a result of the lower corporate tax rate.

The company is expected to post increased growth from 2010 to 2015. Forecast hikes in real estate revenues will come from the strong performance of the affordable, middle-income and high-end segments.

Mid-rise buildings such as One Oasis-Cebu, One Oasis-Davao, One Oasis-Ortigas, Bali Oasis and the company’s first high-rise building, The Linear, will generate bulk of future revenues.

Rental income is also expected to augment FLI’s revenue generation, although at more modest growth levels. The improvement in leasing operation results will come from additional lease area and rental escalations.

FLI is also expected to benefit from the earnings potential of Cyberzone Properties Inc.’s (CPI) business process outsourcing (BPO) buildings through its acquisition of Africa-Israel Properties (Phils) Inc.’s 40 percent stake in CPI.

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