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Megaworld capex set at P230B over 5 years

Posted on June 16, 2014 10:17:42 PM [ BusinessWorld Online ]
By Daphne J. Magturo

MEGAWORLD Corp., the flagship unit of property developer Andrew L. Tan’s Alliance Global Group, Inc., said it will invest P230 billion over the next five years to help meet its aggressive expansion targets.

Megaworld Senior Vice-President Jericho P. Go, speaking to reporters yesterday after marking the company’s 20th anniversary as a listed company, said the company’s market capitalization has grown by more than 55 times to P150 billion, from P2.7 billion when it listed in June 1994.

He added that the P230-billion capital expenditure (capex) will be allocated to residential, office, hotels, commercial and retail projects in its various townships, as well as for land banking, to support plans to launch an average of 10 residential projects and six office towers every year.

“We are definitely on track to reaching one million square meters (sq.m.) of office space inventory within five years,” Mr. Go said. “By the end of this year, we will have 712,000 sq.m. [of land bank], so on an average, we are adding a minimum of 100,000 sq.m. per year.”

Harold Geronimo, director for the Strategic Marketing and Communications Group, said the firm company averaged P20 billion to P30 billion in capex yearly over the last five years.

By way of contrast, Director for Investor Relations John Hao said this year’s capital expenditure will hit P40 billion, from P35 billion in 2013 and P24 billion each for 2012 and 2011.

Mr. Go said a “huge part” of the five-year capex will be internally generated.

“Aside from the internally generated funds, we might pursue some debt raising as we still have room to increase our leverage. I think we are the only property company in a net cash position,” Mr. Hao said.

“We made some brokerage firms do a survey in terms of the amount of space being generated by various developers and we continue to be the largest and the number one BPO (business process outsourcing) landlord and developer in the Philippines,” Mr. Go said.

The company expects the net profit contribution of office space to rise to 50% from 40% and the share of residential properties to fall to 45% from 50%.

Mr. Go also allayed fears of possible “congestion” in the BPO market.

“There is no congestion in the BPO market. There is no slowdown. We have very good demand and we are accelerating our office and BPO projects,” he said.

The company is also expanding outside Metro Manila, and Mr. Go said the projects in the provinces will have a “fair share” of the budget allocation.

“For the next 10 years, we’re spending P80 billion for the township in Iloilo, Cebu and Davao,” Mr. Geronimo added.

The company’s global sales offices have noted strong demand particularly from the United Kingdom, “because of the purchasing power,” as well as from Singapore, Italy, the United States, Canada, Spain, Japan, Ireland, Kuwait, the United Arab Emirates, Qatar, Saudi Arabia, and Oman.

Of the P68 billion worth of pre-sales last year, 17% was generated by global sales, mainly from overseas Filipino workers, up from 6% to 7% five years ago, Mr. Hao said.

In 2013, Megaworld began consolidating Mr. Tan’s property businesses under one roof.

It plans to purchase the 49.20% stake of Alliance in Global-Estate Resorts, Inc., bringing to 74.96% its total ownership in the firm.

It also acquired 100% of Suntrust Properties, Inc. last year and owns 82% of Empire East Land Holdings, Inc.

Megaworld first-quarter net income grew 49% from a year earlier to P2.69 billion.

Total revenue of the company and its subsidiaries surged 22% from a year earlier in the first three months to P9.94 billion.

Costs and expenses rose 15% to P6.6 billion from P5.8 billion.

Megaworld closed at P4.52 yesterday, up 0.22% or P0.01.

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