Century Properties buys IS property for P1.432B

The government has sold the Makati property formerly occupied by the International School to Century Properties Inc. (CPI) for P1.432 billion, the Arroyo administration’s first major asset sale this year.

The Department of Finance (DOF) announced yesterday that the government has accepted CPI’s offer to buy the 48,832-square meter property after several failed attempts to bid it out in the last five years.

Finance Undersecretary Gabriel Singson Jr. said the contract was scheduled to be formally signed in the next few days and after the formal signing, CPI would pay the first 10 percent of the purchase price and another 10 percent within the next 90 days.

The remainder of the amount, according to Singson, would be payable within one year of the contract-signing.

Singson said the present value of the purchase price was 10 percent higher than the government’s indicative price of P1.186 billion, using a discount rate of 12 percent per annum as specified in the terms of reference.

Singson said the government would retain legal and physical ownership of the IS property until CPI pays the purchase price in full.

Prior to the negotiated sale, the IS property was subjected to four public biddings between 2000 and 2005. All bidding exercises failed due to disagreements over the price and valuation.

After the last failed bidding in November 2005, Singson said other parties offered to buy the property outright but the offers were well below the government’s indicative price.

According to Singson, there were also offers for joint-venture development plan for the property but the terms were not acceptable to the government.

The DOF then invited offers for a negotiated sale of the property and received offers from the AMA Group Holdings Corp. and CPI.

According to Singson, the AMA offer was payable in five years and had a net present value equivalent to only 92.1 percent of the government’s indicative price. The group later withdrew its offer.

The sale of the IS property followed the sale of the Paco, Manila property of Manila Gas Corp for P573 million to the Robinson’s Land Corp. last year.

Both the MG and IS properties have been repeatedly bid out by the government under different administrations but the slump in the property development market has forced all previous auctions to fail either due to lack of interest or due to low bids deemed unacceptable by privatization officials.

The IS property was sold as an institutional zoned area after the failure of earlier plans to get the property reclassified as a commercial zone.

Next to MG and IS, the DOF said the next most probable sale to succeed was the sale of the 60-hectare property now occupied by the Iloilo airport.

The DOF said the new airport now under construction was scheduled to start operations by 2007 so the government was targeting to sell the old airport site before the end of 2006.

Other government assets, however, were more problematic such as the government interests in Maynilad Water Services and Nonoc Mines which has been subject of an expired memorandum of agreement between the Philippine and Chinese governments.

A group of big nickel mining conglomerates in China have expressed interest in Nonoc mines but the property could not be sold until the company paid off its obligations to the National Government.