IFC extends record loan to Filinvest Land

Filinvest Land Inc. (FLI) , a real estate development firm owned by the Gotianun family, has signed an agreement with the International Finance Corp. (IFC) for a P2.25 billion (approximately $41 million) loan to help improve the availability of mortgage financing to lower and middle-income buyers.

IFC country manager Vipul Bhagat said this was the largest local currency financing extended by IFC to a Philippine company. The loan has a term of eight years.

"IFC is making this loan because we know that more financing is needed to allow people to realize their dreams of owning a home. We are doing it because we understand that a broad and deep housing finance market has a strong positive impact on the financial sector. And we are doing this because we want to find ways to support well-managed local companies in gaining access to long term local currency financing," Bhagat said.

He said the loan will be supported by a technical assistance program funded by IFC to assist FLI in improving credit policies, loan management procedures and risk management systems in its mortgage operations.

FLI chairman and chief executive officer Mercedes Gotianun said the company is firmly committed to support the government’s housing need of 3.75 million units for the period 2005 to 2010.

"With our landbank of over 2,400 hectares and our existing 62 ongoing projects, we are confident we can make a substantial contribution towards this end," Gotianun said.

For almost 40 years, FLI has transformed over 15 million square meters of raw land into homes for over 80,000 families in 90 projects located in key cities of the country. Over 54,000 of these homes fall under the socialized housing category.

Bhagat said the loan to FLI is part of a broader strategy by IFC to support the housing finance market, to encourage private sector participation and promote the development of the capital markets.

"I hope and expect that this transaction provides more momentum for the housing market and mortgage finance," he said.

There is an acute shortage of housing finance in the Philippines. Government-owned financial institutions are restricted to providing mortgages to qualified low-income households while the banks focus on providing mortgages primarily to higher income households. Many middle and lower income households are unable to obtain mortgages despite having the capacity to service them.

Bhagat said IFC also intends to work with existing and new financial institutions that are looking for ways to innovate, improve the credit culture and ultimately contribute to an expanded market.

As a global financial institution, IFC has participated in the expansion of housing markets in developing countries in Asia and other parts of the world.

IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives.

Since its inception in 1956 through 2004, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries.