Philrealty seeks court approval for its amended rehabilitation program

The rehabilitation receiver for Philippine Realty and Holdings Inc. has asked the Quezon City Regional Trial Court to approve the property developer’s amended recovery program, which calls for the settlement of P1.31 billion in secured debt through a dacion en pago (payment in kind) arrangement.

The amended rehab plan also calls for the restructuring of P890.6 million in secured debt over a period of 10 years, and the completion of the Skyline tower of Philrealty’s Andrea North Project in Quezon City, estimated to cost P1.18 billion.

Philrealty’s rehabilitation receiver considers the completion of the Andrea Skyline Project critical to the rehabilitation efforts "as this would restore public confidence on the ability of petitioner to continue and complete its on-going projects and undertake new projects in line with its main purpose of real estate development."

The cashflows expected from joint ventures or sale of Philrealty’s remaining assets will be used to complete the Andrea Skyline Project, the rehabilitation receiver said.

According to the rehabilitation receiver, Philrealty will retain P957.2-million worth of properties which could be used for operations, joint venture development and sale.

The receiver expects Philrealty to raise about P3.89 billion in cash over a period of 15 years assuming that the company can limit total administrative expenses to a yearly increase of five percent per annum, which the increase in rental/lease income should cover.

The receiver said while it believes that cash payment is always the preferred mode of payment for a creditor given certain parameters of safety and predictability, Philrealty will not be able to service its principal bank obligations amounting to P1.97 billion and its unsecured obligations amounting to P27.2 million.

Total debt to secured creditor banks is P2.2 billion, P1.8 billion of which is owed to Metropolitan Bank & Trust Co., the biggest creditor-bank of Philrealty. Other secured creditor-banks include the Land Bank of the Philippines (P165.37 million), Prudential Bank (P168.53 million), and Export Industry Bank (P5 million).

The receiver has also asked the court to accept e-Value, the preferred appraisal company of Metrobank as the basis for the valuation of the assets for dacion without need of further revaluation. The total debt to be settled via dacion is P1.86 billion while the amount to be settled via debt restructuring is P720.2 million.

It likewise recommended that Metrobank be given a seat in Philrealty’s board of directors to allow it to closely monitor the implementation of the rehabilitation plan.

Moreover, the receiver disclosed that the Export Industry Bank and Equitable PCI Bank accepted the valuation of assets which were assigned to them via dacion en pago at 100 percent of the appraisals made by third-party appraisers.

As for the unsecured creditors, they shall be paid only after all secured creditors have been paid and the Andrea Skyline Project has been completed. In the event that the unsecured creditors agree to a minimum discount of 60 percent on their respective claims, they maybe paid in cash.

Owing to tight liquidity problems as a result of the continued slump in the real estate industry since 1997, Philrealty sought a moratorium on the payment of its debts to prevent creditors from instituting foreclosure proceedings.

Once a high-profile real estate company, Philrealty is primarily known for its projects in the Ortigas Center, foremost of which is the Textite Towers – the headquarters of the Philippine Stock Exchange (PSE).

Philrealty’s other projects and Landbank include the Alexandra Condominiums in Ortigas and lot properties in Tagaytay, Batangas, Quezon and Rizal.

Owned by the Ortigas family, Philrealty was last traded at P0.02 per share. It was listed with the PSE in September 1987.