Megaworld in talks with IFC for $12.5-M loan

Upscale property developer Megaworld Corp. is negotiating with the International Finance Corp. (IFC) for a $12.5 million loan to fund the development of two 10-story buildings that will cater to business process outsourcing (BPO) and information technology (IT) firms.

Megaworld chairman and president Andrew Tan said yesterday the company has programmed for immediate development the P3 billion 1880 Eastwood Avenue office tower at the Eastwood City CyberPark in Quezon City.

The office building will have a total leasable space of 70,000 square meters.

The project will be undertaken in two phases, with the first phase expected to be completed in the first quarter of 2007 and the second, in early 2008.

Tan is hopeful that a loan agreement will be signed within the month. The loan will be payable over an eight-year period.

This project, geared to cash in on an escalating demand for made-for-BPO office space, will assure Megaworld of long-term leadership in the BPO-oriented segment of the market.

With the continued expansion of call centers and depletion of office space catering to the BPO sector in Metro Manila, a substantial take-up of the first phase may occur well before its turnover, Tan said.

Megaworld has transformed its pioneering Eastwood City CyberPark into the country’s premier IT hub.

To date, BPO tenants occupy around 80,000 square meters of office space at the Eastwood City CyberPark, making Megaworld the industry’s number one landlord.

Among these companies include e-Telecare, the world’s most awarded and largest Asia-based call center; SITEL Corp., one of the world’s top five call centers in terms or revenue and a provider of outsourced customer interaction solutions; and Globalstride.

The BPO sector has emerged as a major driver of the country’s economic growth. From only 2,000 seats in year 2000, the number has jumped to 40,000 in 2004.

Analysts estimate total seats to grow to 80,000 by the end of 2005.

Megaworld expects its net profit to grow by more than 20 percent this year, mainly coming from the rentals of office space by outsourcing companies and higher sales from middle-income projects.

Revenues are likewise expected to go up by more than 30 percent this year because of escalating rentals in the office sector.

Last year, Megaworld posted a net income of P759.72 million or 32.3 percent higher than the P574.21 million reported in 2003. Revenues, on the other hand, went up 21 percent to P4.21 billion from only P3.48 billion.

Megaworld plans to spend around P25 billion over 10 years starting this year, on four major property developments, including the 50-hectare Mckinley Hill project in Fort Bonifacio as well as a 25-hectare logistics center at the Villamor airbase called Newport City.

Mckinley Hill will comprise a residential subdivision, low-rise condominiums and a commercial center. The project is a 50-50 joint venture with the Alliance Global Group Inc.

On the other hand, Newport City, a joint development with the Bases Conversion Development Authority, is expected to generate P150 million in recurring income a year from an airport hotel and retail and commercial operations. Marketing of the residential section of Newport City is slated to kick off by the third quarter of the year.

Megaworld focuses on the middle to high-end residential and office markets. It also has 43 percent owned subsidiary Empire East that caters to the lower to middle income market segment.

Another project of the company is the P15 billion Forbes Town Center, a joint development with the Bonifacio West Development Corp.

Megaworld has a landbank of one million square meters, good for 7 to 10 years of development excluding potential joint ventures.

Apart from property development, Megaworld is also into hotel operations through Prestige Hotels & Resorts Inc., a subsidiary which operates the Richmonde Hotel in the Ortigas Center.