Philrealty seeks partners for joint development of 1,600-ha property in Fort Boni

In line with efforts to further reduce its debts, listed property developer Philippine Realty & Holdings Corp. (Philrealty) has began talks with local and foreign groups for the joint development of a 1,600-hectare property in Fort Bonifacio.

At the sidelines of the company’s stockholders meeting yesterday, Philrealty president Amador Bacani said the property is located near Dencio’s Restaurant and was acquired by the company for P200 million in 1996.

"The talks we’ve held are exploratory. We hope to close a deal within the year... The more funds, the better," Bacani said.

Bacani said most of these groups are foreign property firms that have expressed interest in putting up an office building.

The company’s strategy, according to Bacani, is to enter into joint ventures wherein Philrealty will merely contribute the land and other pre-development expenditures while the partner will shoulder the cost of construction of the building.

Last March, Philrealty signed a joint venture agreement with Xcell Property Ventures Inc. for the development of two residential buildings on the former’s 4,423-square meter property also in Fort Bonifacio. Construction is expected to take place within five to six years.

Philrealty expects to receive around P800 million from its joint venture with Xcell. It will also receive no more than P100 million as its share of the profits from the venture.

Cash generated from the proposed project will be used to finish the company’s Andrea North residential complex in New Manila, Quezon City, estimated to cost P1.18 billion.

Bacani said 50 percent of the Andrea Tower project has been pre-sold and expects this level to increase to 80 percent by the end of the third quarter due to improving real estate market conditions.

"The real estate sector is in a firm recovery track. We believe that the growth of the sector will continue. Significant growth in tourism and the outsourcing industry will continue to spur the real estate sector," Bacani said.

Bacani said the company has another property in Tagaytay which it hopes to develop on its own or through joint ventures.

Bacani said the company has already settled P250 million in loans to Equitable PCI Bank and the Export Industry Bank through dacion-en-pago or payment in-kind scheme.

He said the company continues to talk tocreditor-banks Metropolitan Bank & Trust Co. and Prudential Bank for the settlement of debts through dacion. Metrobank remains the realty firm’s biggest creditor-bank with around P1 billion.

Philrealty expects its debts to go down to P900 million from the original P2.2-billion debts in 2002 once it reaches an agreement with all creditors for the settlement of obligations through dacion en pago.

Bacani said investments in several companies, including International Exchange Bank, have already paid off. He said Philrealty received P7.8 million as its share in the cash dividends declared by iBank. "We hope to receive a bigger amount if iBank’s projected income is achieved," he said.

In the first quarter this year, Philrealty posted a net income of P1.45 million as against the P1.56-million net loss incurred the previous level. The turnaround was attributed to higher rental income which jumped by 128 percent.

Bacani expects the company to sustain its gains for the rest of the year with profits or revenues expected to hit between P600 million to P700 million.

"We think that the first quarter is representative of our performance for the first six months of the year. We hope to earn P1.5 million per quarter," Bacani said.

Philrealty filed for rehabilitation with the courts after being saddled with losses since the slump of the real estate industry in 1997.

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).