SM Group approves merger of companies

By Jenniffer B. Austria | Posted on Jun. 01, 2013 at 12:02am |

[ manilastandardtoday.com ]

Billionaire Henry Sy is merging its property units and assets under SM Prime Holdings Inc. in a move to create country’s largest property firm with a market capitalization of $14 billion (P588 billion).

SM Investments Corp. and SM Prime Holdings Inc. said in separate disclosures to the stock exchange their respective boards of directors approved the merger via share swap transaction.

The group said under the plan, SM Land, the private property unit of the Sy family, would offer existing SM Prime shares for the outstanding stocks of listed SM Development Corp. and Highlands Prime Inc.

The group said after the completion of the exchange offers, the second step involved the merger of SM Land with SM Prime, with the latter as the surviving entity.

Henry Sy Jr., who will become chairman of the merged entity, said the consolidation aimed to create an integrated real estate company, which would allow the merged entity to undertake larger projects.

“The consolidation will give us the scale, the right organization, the agility and resources that will allow us to participate in highly attractive opportunities that go with stronger macroeconomic environment,” Sy Jr. said.

SMDC is the real estate unit of SMIC while HPI is a developer of high-end properties within Tagaytay Highlands. Both companies will be delisted from the stock exchange following the merger.

SM Prime, the largest shopping mall operator, is poised to surpass Ayala Land Inc.’s P465.6-billion ($11 billion) market capitalization. The move will also allow SM Prime to pursue bigger projects, backed by the group’s experience in developing malls, homes, offices and resorts, it said.

“This consolidation is clearly intended to rationalize the group’s property business,” James Lago, head of research at PCCI Securities Brokers Corp., said before the announcement. “On the one hand, you have property sales that are explosive and volatile and rental income, at the other, which is steady and predictable.”

SM Investments, SM Prime, SM Development and Highlands sought a trading halt Friday. Trading of Sy-owned stocks would resume Monday.

SM Prime said it would acquire specific real estate companies and assets currently held by SMIC in exchange for new shares in SM Prime. One of the assets to be acquired is the 60-hectare Mall of Asia complex in Pasay City.

SM Prime chief finance officer Jeffrey Lim said in a presentation the consolidation would boost the company’s landbank to 920 hectares from 110 hectares while assets would increase to P284 billion from P148 billion. 

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LRWC secures P3-B loan for casino project

By Neil Jerome Morales (The Philippine Star) | Updated June 1, 2013 - 12:00am

MANILA, Philippines - Hotel and recreation firm Leisure & Resorts World Corp. (LRWC) has secured a P3-billion loan that will bankroll the construction of a $1.3-billion integrated casino complex along Manila Bay.

In a disclosure, LRWC, through its wholly-owned subsidiary AB Leisure Global Inc., said it implemented a loan agreement with BDO Unibank Inc.

The loan will allow AB Leisure to partially fund the construction of the Belle Grande integrated casino and resort.

“In exchange for AB Leisure’s contribution, it shall be entitled to 30 percent of the fixed yearly income generated from the lease of all commercial spaces in the project, inclusive of the hotel, retail and casino premises,” LRWC said.

AB Leisure will also be paid fees equivalent to a third of the 50 percent share of Premium Leisure and Amusement Inc. (PLAI) on the earnings from casino operations.

LRWC partnered with Belle Corp., the leisure development firm of mall and banking tycoon Henry Sy, for the casino project within the 100-hectare Entertainment City.

Macau-based casino giant Melco Crown Entertainment Ltd. will manage the integrated casino project, which will mark Melco’s first foray outside Macau.

Belle Grande will be the second complex to open in the area, groomed as the Philippines’ version of the Las Vegas strip, next to port mogul Enrique Razon’s $1.2-billion Solaire Casino & Resort that started operations in March.

In January, LRWC announced a 200-million stock dividend and a plan to raise P1.75 billion through preferred shares.

Proceeds of the capital raising will be used to finance the acquisition of additional bingo sites, the equity portion in the Belle Grande, the Techzone and Midas Hotel projects.    

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Pagcor to end lease with Grand Plaza Hotel Corp.

May 31, 2013 7:36 pm [ manilatimes.net ]

by KRISTYN NIKA M. LAZO

Grand Plaza Hotel Corp. (GPH) will conclude its 9-year-old leasing agreement with the Philippine Amusement and Gaming Corp. (Pagcor) on July 10, after three consecutive contract renewals.

In a statement released a the Philippine Stock Exchange on Friday, GPH said that it will end the leasing agreement of Pagcor to Heritage Hotel because it has exhausted the renewal of the contract every three years.

According to GPH disclosure, Pagcor “will not renew the contract of lease upon its expiration on July 10.”

Pagcor renewed the contract third and last time on March 30, 2010, which provided another three years of casino operations for GPH.

The leasing agreement between Pagcor and GPH started in August 1993, and by the time GPH opened Heritage Hotel in 1994, Pagcor started its rental of the hotel.

Since 1993, Pagcor rented 4,745 square meters of hotel area, accumulating to a monthly rental of more than P10 million.

Heritage Hotel is the main hotel owned by GPH, situated along Roxas Boulevard, Pasay City.

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Eton Properties targets P10B capex in four years

Posted on May 31, 2013 08:38:25 PM [ BusinessWorld Online ]

Eton Properties Philippines, Inc. is planning to spend as much as P10 billion in the next four years for existing and new projects, an official said on Friday.

In the meantime, the company will spend up to P4 billion for this year to complete existing projects.

“If we have to do all the projects altogether it should be in the vicinity of -- the cost of completion -- P3-P4 billion, but [in the next] three to four years it is about P10 billion,” Danilo A. Antonio, the company’s the newly appointed chief operating officer told reporters following the company’s stockholders meeting in Makati City.

Projects that are slated for completion are horizontal development West Wing Villas in Quezon City; 8 Adriatico Condominium in Manila and 68 Roces luxury residences in Quezon City, he said.

Mr. Antonio said the company will source its funding from its parent LT Group, Inc., which recently raised P32 billion from an equity offering.

Mr. Antonio said the company is also planning to expand the Eton Centris, a business process outsourcing and retail complex located in Quezon City.

Eton Properties’s net income plunged 94.27% to P42.04 million last year from P733.29 million in 2011 as the company has yet to complete its projects.

“The capex should drive earnings very well. As we get to implement the project faster, we’re able to commit construction cost per square meter and zero it in, we should be able to protect the margins we have,” Mr. Antonio said.

The company was delisted in December last year for failing to meet the 10% required public float level. -- CHCV

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Socialized housing converted to cash

Posted on May 30, 2013 09:43:48 PM [ BusinessWorld Online ]

DAVAO CITY -- The city council has allowed two property developers to convert their socialized housing requirements to cash.

The council, led by Councilor Rachel P. Zozobrado, passed a resolution on Tuesday allowing Kisan Lu Lands and Development, Inc. and Robinsons Land Corp. to set aside P1.965 million and P625,000, respectively, equivalent to the supposed 20% share of socialized housing in their residential projects.

The proceeds, in turn, will go to the city government, funding its public housing program.

"Kisan Lu and Robinsons don’t have the land to give, so they will [provide the city instead with] the monetary equivalent," Ms. Zozobrado said.

Republic Act 7279 requires subdivision developers to allocate "an area for socialized housing equivalent to at least 20% of the total subdivision area or the total subdivision project cost at the option of the developer, within the same city or municipality."

Ms. Zozobrado admitted that many companies do not want to include socialized housing in their plans. They prefer to convert their requirements to cash, allowing them to comply with the provisions of the law.

Davao City has experienced a housing boom lately with big corporations putting up projects both in the city’s northern and southern sections. However, these projects are either expensive mid-rise condominiums or upscale subdivisions.

According to housing developers, upper and mid-level markets requirements are currently being addressed because the demand is high.

The government housing officals of Davao City declined to comment on the impact of the council action.

While the city government has amended the local incentives code to exclude property development as a priority area for investment, it still grants incentives to mass housing projects.

Jason C. Magnaye, acting chief of the Davao City Investment Promotion Center, said earlier that granting incentives to socialized housing developers would attract developers to help the city government address the housing backlog.

The shortage, estimated two years ago, is pegged at about 40,000. The city has an estimated 250,000 families.

Two years ago, Vice-President Jejomar C. Binay, chairman of the Housing and Urban Development Coordinating Council, said he was pushing for the creation of the Department of Housing, aimed at addressing the national housing backlog, estimated at about 3.6 million at that time. -- Carmelito Q. Francisco

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