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Federal Land to spend P12B

Posted on January 24, 2013 10:52:45 PM [ BusinessWorld Online ]
FEDERAL LAND, Inc., the real estate arm of conglomerate GT Capital Holdings, Inc., plans to spend P12 billion on projects this year, about a third more than 2012 levels, a senior company official said recently. 
“We are budgeting a capex (capital expenditure) of P12 billion in 2013 as Federal Land remains bullish in 2013,” Jose Mari H. Banzon, Federal Land executive vice-president and general manager, said in an e-mail on Wednesday last week.
This is up 33.33% from the P9 billion the company spent last year, he then said in a text message last Monday.
“Bulk will be for construction of condominium developments and retail and office buildings. Funding will be from internal cash flow and borrowings,” Mr. Banzon said in his text when asked for details.
He cited perceived robust demand for the company’s projects as the reason for the planned increase in spending this year.
“Reservation sales remained robust in 2012, growing by over 50% as compared to the previous year, driven by strong demand for our residential projects in Metro Manila and Cebu,” Mr. Banzon said in his e-mail.
“Net income grew by an even larger margin, buoyed by the strong sales and some extraordinary income,” he added, without elaborating.
Mr. Banzon cited in his e-mail factors that are expected to support the company’s growth this year.
“Interest rates are expected to remain low and overseas remittances are forecasted to remain steady. The upcoming elections and the likely upgrade of the Philippine debt rating are expected to further spur the economy and benefit our business,” he said.
Approximately 12 property projects are lined up for launching this year, Mr. Banzon added.
“We launched 12 projects in 2012 located in strong growth areas, including Bonifacio Global City (BGC), the (Manila) Bay Area, Binondo, Paco, and Cebu,” he wrote.
“We expect to launch at least the same number of projects in 2013 to be situated in both existing areas as well as new locations.”
In terms of land, Mr. Banzon said Federal Land’s current holdings are sufficient for the next decade.
“We believe that our current land bank is sufficient to support our development for the next 10 years. We are not aggressively looking to expand our land bank at the moment but do look at opportunities as they arise,” he said in the e-mail.
Federal Land now has land holdings totaling about 100 hectares, mostly in prime areas like BGC, Makati City, Ortigas Center, and Manila Bay, Mr. Banzon said.
Federal Land’s parent, GT Capital, is the holding firm for the businesses of the Ty family, with investments in banking, real estate, power generation, life insurance, and automobiles.
The firm more than doubled its net income to P6.86 billion as of September last year from P2.64 billion in the same nine months in 2011, due to gains from the consolidation of its power business, a bigger share in the net income of its units, and non-recurring income from its property subsidiary.
In the same comparative periods, revenues -- consisting mostly of fees, equity in net income of associates, as well as finance and other income -- tripled to P16.70 billion from P5.37 billion, while costs and expenses grew more than threefold to P9.71 billion from P2.66 billion.
Shares of GT Capital added P13 or 1.95% to close at P678 apiece yesterday from P665 last Wednesday. -- F. J. G. de la Fuente    

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