Arthaland to spend up to P30 billion in next 6 years

ARTHALAND Corp. is spending as much as P30 billion to develop properties and acquire land toward 2022, with more leasable projects identified to expand its recurring revenue base to 40% within the same period.

The property developer will invest between P20 billion and P30 billion in the next six years for project development and land acquisition, its Vice-President for Strategic Funding and Investments Sheryll P. Verano said in a media briefing in Makati City following the listing of preferred shares worth P2 billion on Tuesday.

Of the total budget, P20 billion will finance five developments located in Taguig, Cebu, Laguna, Makati and south of Manila; about P4 billion for another three unannounced projects and P6 billion for land acquisition.

Arthaland expects to have expanded its portfolio to 520,000 square meters ( sq. m.) in terms of gross floor area ( GFA) from 110,000 sq. m. currently. It intends to deliver half or 260,000 sq. m. to the office segment and the remainder to the residential market.

The pipeline includes Arthaland Century Pacific Tower, a 30-story office development with 34,000- sq. m. GFA in Bonifacio Global City in Taguig. The company will lease the headquarter office tower, slated for completion in the first half of 2017.

Arthaland is developing alongside a 38-story office building partly for business process outsourcing ( BPO locators in Cebu until the second quarter of 2017. It intends to sell 85,000 sq. m. of the 107,000- sq. m. GFA of the tower, which is called Cebu Exchange.

The company will acquire another property spanning 3,000 sq.m. in southern Metro Manila for a medium-rise office building marketed to BPO firms.

“For the office, again, it could be a mix [ of units for sale and lease] because, of course, if it’s a good location, we may want to keep some of them while selling some of them,” Arthaland President and Chief Executive Officer Angela de Villa-Lacson said.

“That’s how we’re going to grow the recurring income,” the executive noted, with the boutique property developer targeting to source a minimum of 40% of its total revenues from leasable assets going forward.

“Our target is to really grow it (recurring revenue) between 35% and 40% by 2022. Depending on our take-up or sales go, as opportunities present themselves, that may go faster than expected,” Arthaland Treasurer Leonardo Arthur T. Po said during the briefing.

Unlike the Po family’s real estate business, many property developers have opted to lease rather than sell office and other commercial projects to beef up their recurring revenue flows.

“We are a growing company so we have to make sure that, as we develop, we are able to manage the growth in such a way that we are able to cover our requirements and at the same time to be able to have income that will grow,” Ms. de Villa-Lacson explained.

Aside from the office towers, Arthaland will develop its first campus- type housing project, an 8.2-hectare residential community in Biñan City in Laguna. The company is acquiring another 2,000-sq.m. in the Makati central business district for a high-rise condominium.

Arthaland will finance the developments using a portion of proceeds from the issuance of 20 million preferred shares at P100 apiece for a total of P2 billion.

The company listed the nonvoting, non- participating, nonconvertible, redeemable pesodenominated preferred shares, which form part of a P3-billion shelf offering, on the Philippine Stock Exchange on Tuesday.

The issue was oversubscribed four times, Eduardo V. Francisco, president of lead underwriter BDO Capital & Investment Corp., noted during the briefing.

“I think it’s really a tribute to the (Po) family, how they manage,” the banker said. “So, I guess, despite the political scenario and what’s happening in the world, if I may say, this deal was oversubscribed four times.”

The Po family is bringing another business public — Shakey’s Pizza Asia Ventures, Inc. — through an initial public offering (IPO) of 351.9 million common shares for P11.26 apiece or P3.96 billion in total. The offer period will close on Dec. 8 in time for the listing of the securities on Dec. 15.

“Shakey’s is not even finished but, as of yesterday ( Monday), it’s oversubscribed more than five times already,” Mr. Francisco said, referring to the IPO managed and underwritten by BDO Capital along with First Metro Investment Corp.

Shares in Arthaland closed 0.5 centavo or 1.54% higher at 33 centavos apiece on Tuesday.