FLI retains top credit rating for P5-B bonds

MANILA, Philippines - Filinvest Land Inc. (FLI) retained the PRS Aaa rating for its P5- billion outstanding bonds,domestic credit watcher Philippine Rating Services Corp. said.

“Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong,” according to PhilRatings.

Of the P5-billion bonds, P4.5 billion will mature in 2014 and the balance of P500 million in 2012.

In assigning the rating, PhilRatings took into consideration FLI’s steady growth in real estate and leasing operations resulting in healthy income generation; sound debt position and financial flexibility; established brand name; the company’s diversified portfolio; and favorable industry conditions.

FLI’s net earnings grew 66.2 percent to P1.99 billion last year. Even without the impact of the extraordinary gain from business combination, net income would still be 21 percent higher at P1.45 billion. The gain from business combination was a result of the acquisition of the 40-percent equity interest each in Cyberzone Properties Inc. (CPI) and Filinvest Alabang Philippines Inc.

Consolidated revenues reached P4.69 billion, up 48.64 percent as real estate and leasing operations expanded 61.21 percent and 16.44 percent, respectively. Among the housing segments, the middle-income segment continued to show the most remarkable performance due to the healthy take-up of the company’s mid-rise buildings (MRB) and high-rise building (HRB).

Revenue growth in the coming years will be derived from the middle-income and high-end segments. Higher rental income from Festival Supermall and Northgate Cyberzone will likewise contribute to the growth, PhilRating noted.

Despite the increase in borrowings, which were used to finance capital expenditures, the company’s debt-to-equity ratio remained conservative at 0.31x as of Sept. 30, 2010. In 2011, capital expenditure funding and debt servicing will come from internally-generated funds and additional loans. The company’s moderate leverage provides it with enough leeway to avail of additional loans when the need arises. New loans may be obtained from the company’s unavailed credit and rediscounting facilities with several banks.

FLI has, through the years, built its image as a reputable property developer. In addition, the diversity of its projects allows it to benefit from each area’s economic development - be it socialized, affordable, middle-income or high-end. The company’s established brand name, on top of the strong demand for housing, has resulted in healthy take-up for the company’s projects. Even those which are still at the pre-selling stage already enjoy good market response.

Housing demand and demand for business process outsourcing (BPO) offices and buildings are expected to remain healthy in the succeeding years. Interest rates which have been kept low, as well as strong overseas Filipino remittances which reached an all-time high of $18.6 billion in 2010 (up 8.2 percent from the previous year’s level), will continue to bolster the demand for housing.

Projects which are presently being developed by FLI include Citta Di Mare and Il Corso, which will be situated at the South Road Properties in Cebu. MRBs and the company’s first HRB project, The Linear, are also being constructed. Going forward, FLI plans to remain focused on its core residential real estate development.