Posted on July 25, 2016 [bworldonline.com ]
CENTURY Properties Group, Inc. (CPG) is building up a portfolio of assets expected to deliver recurring revenues amounting to P1 billion by 2020, and allowing the company to launch a real estate investment trust (REIT) for fresh capital.
The upscale property developer will complete seven projects spanning 300,000 square meters (sq.m.) with a net leasable area of 125,000 sq.m. until 2019, its Chief Financial Officer Jose Carlo R. Antonio told stockholders in an annual meeting in Makati City on Friday.
“For these seven projects, the total [capital expenditures] is projected to be around P7.9 billion... By 2020, we project revenues from these seven assets to reach P1 billion,” Mr. Antonio added.
To date, the company has completed the Century City Mall, the Centuria Medical Makati and the Pacific Star low-rise Tower in Makati City.
CPG targets to complete the following projects: Forbes Media Tower at Century City, a joint venture partnership with Mitsubishi Corp., in Makati City; the Asian Century Center in Fort Bonifacio, Taguig City; and the Novotel Suites Manila in Mandaluyong City, in 2017 through 2019.
The company has a total of 48 properties under management as of end-December 2015. These include 27 commercial developments with an aggregate floor area of 1.29 million sq.m.
Expanding the leasing portfolio forms part of efforts to ensure a steady income stream for CPG, which intends to balance its business with vertical residential, commercial, horizontal economic housing and leisure and tourism developments.
“The way we look at it, we will have a four-legged table: we have our vertical now and then we have our recurring income portfolio, which will be office and retail,” CPG President and Chief Executive Officer Jose E. B. Antonio told reporters after the stockholders meeting.
“Then we will have our economic housing, which will be our third leg, then fourth will be leisure and tourism. So, it’s going to be very stable, you have four legs. You don’t rely on one segment for your profitability,” he said.
CPG is looking to start developing properties spanning 26 hectares and 44 hectares initially into separate economic housing projects near the National Capital Region before the year ends.
“We are looking to sell homes that are priced below P2 million. We are nearing the final stages to invest in land in both the south and north of Metro Manila, where we plan to build 3,000 homes and 5,000 homes, respectively, in these two projects,” the younger Mr. Antonio said.
In addition, CPG intends to roll out leisure and tourism-related developments in properties acquired in Batulao, Batangas and San Vicente, Palawan within the year to take advantage of the expected increase in tourist arrivals.
When asked for a target revenue mix, the CPG president said: “Roughly, it’s going to be a quarter.”
CPG netted P1.52 billion from revenues totaling P10.38 billion last year. The company’s income largely came from real estate sales amounting to P7.75 billion, with the leasing business contributing P311.7 million only.
Also, the expansion of the leasing portfolio will provide CPG the flexibility to launch a REIT once the new government relaxes the tax treatment and public float requirement for such a trust, the younger Mr. Antonio said.
“This (REIT) is applicable basically to recurring income -- to malls, to office buildings and not to for-sale assets so there are minimum requirements... It’s one of the reasons why we’re building the leasing asset base as well,” he noted.
The elder Mr. Antonio cited how a REIT could provide liquidity to “an otherwise long-term asset” by floating it on the Philippine Stock Exchange.
The country’s REIT measure or Republic Act No. 9856 lapsed into law in December 2009. No major property developer has yet to launch such a trust because of restrictive implementing rules and regulations (IRR).
The administration of President Rodrigo R. Duterte has initiated a review of the IRR, particularly the provisions for the taxation of asset transfers and an increase in the minimum public float of a REIT to 67% from 33% within three years.
“Chances are it will happen, just a question of when. It’s a question of the implementing rules and regulation because we have a law, the REIT law is there. It’s just a matter of implementing it,” the CPG chief executive said.
Shares in CPG closed a centavo or 1.89% higher at 54 centavos apiece on Friday. -- Keith Richard D. Mariano