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Rockwell’s capital spending up for office, retail dev’t projects

Posted on May 27, 2015 09:38:00 PM [ BusinessWorld Online ]
By Krista A. M. Montealegre, Senior Reporter

ROCKWELL Land Corp. is raising its 2015 capital expenditures budget as the Lopez-led property developer ramps up the development of office and retail projects to beef up recurring income stream in the next five years.

On the sidelines of the company’s stockholders’ meeting yesterday, Rockwell Land President Nestor J. Padilla said the real estate firm is spending P13 billion this year, 50% higher than the P8.7-billion allocation in 2014.

The listed company has secured its financing to support its capex, but it may raise funds in the latter part of the year depending on how acquisitions pan out, Rockwell Land Senior Vice-President Ellen V. Almodiel said.

Majority of the programmed spending will be earmarked to finance the development of its projects.

“The focus on increasing recurring income is a priority in the next five years,” Mr. Padilla said.

Rockwell Land is projecting the share of the company’s commercial development business to earnings before interest, taxes, depreciation and amortization (EBITDA) to increase to roughly 40% from 32% last year.

To achieve this, the listed real estate firm is growing its office and retail space in the next five years by 2 times and 1.5 times from 2014 levels.

Rockwell inked two long-term lease deals for office and retail properties in San Juan City and Mandaluyong City that will contribute some P500 million to recurring EBITDA annually starting 2017, about half of 2014’s P986 million. Development of the two properties will cost P4.5 billion.

These projects, which cater mainly to the growing business process outsourcing industry, will add 68,000 square meters (sq.m.) of leasable space.

Rockwell Land is breaking ground this year on the expansion of Power Plant Mall, which will deliver another 5,700 sq.m. of leasable space in the premier shopping center.

In the fourth quarter, the listed firm is opening the third tower of Rockwell Business Center in Ortigas and 8 Rockwell, the company’s first premium office building within Rockwell Center, substantially beefing up revenues from commercial development.

Rockwell Land is eyeing to raise its public float from the current 12%-13% to allow the “market to price [its shares] correctly,” but did not provide a definite timetable.

Its shares rose 0.61% to close at P1.66 apiece, just a few points above its 52-week low of P1.60 apiece.

“It’s really our frustration that the market does not price Rockwell the way it should be priced. The price does not reflect the true performance of the company. The price does not reflect the brand following of Rockwell,” Mr. Padilla said.

The company is also evaluating opportunities for overseas expansion, capitalizing on opportunities presented by the Association of Southeast Asian Nations integration.
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