Megaworld targets P20-B rental revenues by 2020
MEGAWORLD Corp. expects to grow its rental income to P20 billion toward 2020, with the completion of nearly a million square meters (sq.m.) of office, mall and commercial spaces across the country.
In a disclosure to the Philippine Stock Exchange on Wednesday, the urban township developer projected that its P9-billion rental income in 2015 will have more than doubled over the following five years.
“While we remain strong in our residential condominium business, it is also imperative for us to also fortify our rental portfolio,” Megaworld Senior VicePresident Jericho P. Go said in the statement.
“This direction will not only allow us to become a stronger and more sustainable company, but at the same time, we address the increasing demand for these spaces in our various townships, the executive added.
The listed company’s portfolio of leasable properties is expected to expand to more than 2.5 million sq.m. by 2020.
In the next three years, Megaworld targets to complete office, lifestyle malls, commercial spaces and other leasable developments spanning close to 1 million sq. m. across its 22 townships and integrated lifestyle communities.
“By the end of this year, we will breach the 1 million sq. m. of office space inventory as we continue to experience a demand for office spaces,” Mr. Go noted.
At present, more than 130 companies occupy around 850,000 sq. m. of the company’s inventory. Occupancy rates in existing properties average at 99% while pre- leasing in ongoing developments stand around 80%.
“On the commercial side, as population in all of Megaworld townships is expected to also balloon to 1 million by 2020, we expect a tremendous growth in consumer spending especially on food, so we are prepared to address that,” Mr. Go said.
In the last two years, Megaworld opened seven malls and commercial centers with a gross floor area of around 300,000 sq. m. These are Uptown Mall, Uptown Parade, Venice Grand Canal Mall, Twin Lakes Shopping Village, Festive Walk Parade, Burgos Park and Eight Forbes Town Road.
For 2017, the company targets to open new commercial and retail spaces covering 200,000 sq. m. at The Mactan Newtown, Iloilo Business Park, Southwoods City, Uptown Bonifacio, McKinley West, ArcoVia City and some properties in the business district of Makati City.
Megaworld will have completed 18 more malls and commercial centers with 390,400 sq. m. of retail spaces by 2020. The new developments will bring the company’s total commercial and retail space inventory to 1.17 million sq. m. across 30 lifestyle malls and commercial establishments.
“We see a continuing rise in consumer spending especially on food,” Megaworld Senior Vice-President and Head of Lifestyle Malls Kevin L. Tan noted in the statement.
“While each of our townships has its own growing population, we have experienced influx of people visiting our townships because our lifestyle malls also become leisure attractions like the Venice Grand Canal,” he added.
Megaworld is raising P30 billion in the bond market within the next three years to finance its capital expenditures. It will initially issue P8 billion worth of PRS Aaa- rated securities, with a P4- billion oversubscription option, within the first half of the year.
In the first nine months of 2016, Megaworld booked an 11% year-on-year increase in net income to P9.27 billion, following a 5% uptick in revenues to P35.26 billion. It largely benefited from the 15% rise in rental income to P7.41 billion.
Shares in Megaworld closed five centavos or 1.36% lower at P3.62 apiece on Wednesday, tracking its peers in the property sector that suffered from the rising policy uncertainty in the United States. —