Posted on 07:20 PM, June 18, 2010 [ BusinessWorld Online ]
BY NEIL JEROME C. MORALES, Reporter
Property giant Megaworld Corp. expects faster profit growth this year amid an uptick in demand, an executive said on Friday.
The Andrew L. Tan-led property developer has allotted a higher capital spending to spur growth this year, and is looking at putting up real estate investment trusts (REIT) next year.
"This year, we are looking [at] a 10% increase in net profits," Kingson U. Sian, senior vice-president and executive director of Megaworld, said during the firm’s annual stockholders’ meeting in Pasay. Profits of Megaworld rose by 7.2% to P4.06 billion last year given a strong performance in the fourth quarter.
"For reservation sales, our target is around P24 billion ... If we hit the target, it will be our all-time high," Mr. Sian told reporters in a briefing. In January to May alone, reservation sales have reached P11 billion.
For capital expenditures, Mr. Sian said: "We are looking at P17 billion. Last year was P10-11 billion."
Megaworld Chairman and President Andrew L. Tan said the company will continue "cautious expansion" and prevent speculative construction while focusing on phased office space and high-rise residential developments.
Megaworld will launch four more projects this year -- the 270-condominium unit McKinley Maple Park Villas and the 300 to 400-residential lot McKinley West gated community both in Taguig; the 50-storey, 670-unit Two Central West Tower in Makati; and the three-tower, 900-unit Palm Bay in Manila -- on top of three launched in the first quarter.
Last year, the property firm launched seven projects amid the global economic downturn.
Mr. Sian said the company might secure funds through REITs, a new investment vehicle, next year. In December, Republic Act No. 9856, which will allow companies to use pooled capital of investors to buy and manage income-generating property and mortgage loans, became law.
Property giants have already expressed interest to raise funds through REITs. SM Prime Holdings, Inc., the country’s largest mall operator, and Ayala Land, Inc. are seeking to raise $600 million and $300 million, respectively, from REITs.
"There are bigger guys with larger portfolio ... we just want to see how [they] perform and what valuations they can get," Mr. Sian said.
Megaworld might offer a total of 450,000 square meters (sq. m.) of office space for its REIT venture. To date, Megaworld has 380,000 sq. m. of office space at Eastwood in Libis and Fort Bonifacio in Taguig. It will build 70,000 sq. m. more until the end of the year.
Parent Alliance Global, Inc. through Travellers International Group, Inc., has a joint venture with Genting Hong Kong Ltd., to build Resorts World Manila in Newport City and Resorts World Bayshore City within the 90-hectare Bagong Nayong Pilipino Entertainment City Manila. Both are in Pasay.
Shares in Megaworld, whose profits rose by almost a tenth to P1.098 billion in the first quarter on the back of stronger revenues, went up to P1.42 apiece on Friday from P1.38 on Thursday.
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