Property giants eye choice Makati lot

Ayala Land Inc., Robinsons Land and two other developers are going to bid for the five-hectare govenrment-owned property currently occupied by International School (IS) in Makati City.

Sources privy to ongoing privatization proceedings said the IS property which will probably be bid out before the end of the year has attracted at least four major developers.

Aside from Ayala and the Gokongwei-owned Robinsons Land, two other property developers have reportedly expressed interest in the bidding. One is a small property development company and the fourth is either Fil Estate or the developing company owned by retail tycoon Henry Sy, SMPI Land.

The IS property has been lined up for privatization since early this year but the government has been unwilling to immediately sell it due to unfavorable market conditions.

The property was already being packaged for public bidding but the actual auction has been put off pending the conclusion of talks between Malacañang and the city government of Makati which had initially signified its interest in the property.

According to the source, the government is still completing its appraisal of the property to come up with the indicative price before making a decision on whether the property would be bid out or sold directly to the Makati City government.

Independent real estate brokers said the property could fetch around P5 billion.

Initially, the source said Ayala and Robinson’s have signified their intention to bid for the property when it goes on the auction block. The two other developers were equally intent and are said to be waiting only for the government to complete its preparations.

The Department of Finance (DOF) is in the process of conducting a full audit on all government properties that have been lined up for privatization and appointed a new undersecretary to oversee the disposition of the properties.

The Arroyo administration has also started making preparations for the public bidding of its shares in the Lopez-controlled Manila Electric Co. (Meralco), hinting that it might be forced to take a hit and sell the shares despite the depression in the market.

Desperate for cash, the government would be taking a huge hit on the sale of the shares last valued in 2001 at P4 billion, dramatically below the P9 billion estimate in 2000.

Last month, the Privatization Management Office was ordered to prepare for the bidding of the Meralco shares as well as several other government assets such as the 5-hectare property currently occupied by International School.

Government still owns a 10-percent stake in Meralco but its sale has been repeatedly deferred as the market plummeted to historic lows, forcing the government to hold on to the shares despite its own desperate need to generate funds and alleviate its deficit crisis.

The PMO said it wants to initiate the bidding process by making preparations in anticipation of the decision of the Energy Regulatory Commission (ERC) on Meralco's petition for a rates hike.

The government had thought that the enactment of the power reform law would boost the price of Meralco shares but the slump in the stock market and Meralco‚s inability to raise its rates forced the government to scale down its projection.

Two years ago, the government's shares in Meralco were worth about P9 billion. Today, the same shares were estimated to be worth only a little over P4 billion.

In 2001, the PMO failed to make a decision on what to do with the shares after the Commission on Audit rejected a plan to sell the shares by issuing equity derivatives.

Aside from Meralco, the PMO was also directed to prepare the IS property for possible bidding, depending on the outcome of talks with the Makati City government which had expressed interest in the property.

The PMO has also initiated the process of getting a financial advisor for the sale of Philippine Postal Corporation (Philpost). He said the PMO was also evaluating the privatization plan for the Energy Development Corp of the Philippine National Oil Co. submitted by financial adviser R.S. Bernardo & Associates.

The Arroyo Administration's growing desperation stemmed from its yawning budget deficit which was estimated to reach P183 billion in 2003, aggravated by the persistent decline in revenue inflows.