PAGCOR yet to renew lease with Manila Pavillion Hotel

LISTED Acesite (Phils.) Hotel Corp. is facing the risk of losing P29.2 million in monthly rental income with the expiration of the Philippine Amusement and Gaming Corp.’s (PAGCOR) lease contract for a casino operation at the Manila Pavillion Hotel.

While it continues to operate the leased areas, PAGCOR has not decided on renewing its omnibus amended lease contract (OALC) with Acesite since the agreement expired last month, the company told the Philippine Stock Exchange on Tuesday.

“Acesite is currently negotiating for a renewed contract with PAGCOR, and has written PAGCOR to ask for the implementation of a quantum merit solution while a contract is being negotiated,” read the disclosure.

No time frame, however, has been agreed upon by the hotel operator and state corporation for the possible renewal of the lease contract.

“In the unlikely event of PAGCOR’s departure as a building tenant, Acesite will no longer receive approximately P29.2 million in monthly rent from PAGCOR,” the hotel operator said in response to the bourse’s query on the financial impact of the expiration of the lease contract.

“While Acesite has in place alternative plans for the usage of vacated space, it is premature to estimate the financial impact thereof,” it added.

Acesite and PAGCOR entered into the OALC back in December 2010. The amended agreement had then extended the lease term to Dec. 16, 2016 as well as expanded the lease area to 12,696.17 square meters.

The gaming area, Casino Filipino Pavillion, became fully operational in end- October 2011. The activity was scheduled for termination last Dec. 30, according to the latest annual report of Acesite.

The company, controlled by Waterfront Philippines, Inc. since 2004, mainly sources its revenues from room sales, leasing and restaurant operation at the Manila Pavillion Hotel, located along the United Nations Avenue in Manila.

In the three quarters of last year, Acesite more than doubled its net income to P77.2 million from the P34.4 million booked for the comparable 2015 period.

The company’s revenues rose to P445.6 million from P443.1 million in the nine months to September, with the hotel rooms accounting for P110.1 million, food and beverage segment for P73.5 million and rental and other business for P260.5 million.

In 2015, Acesite posted a 65% year-on-year jump in net income to P72.8 million from P44.2 million, following a 10% increase in revenues to P625.6 million from P567.6 million.

Shares in Acesite closed a centavo or 0.74% to P1.37 apiece on Tuesday, in line with most Philippine stocks that benefited from a renewed optimism over the global economy’s direction. —