HGC to pursue air rights sale despite PNR protest

MANILA, Philippines - Home Guaranty Corp. (HGC) president Manuel R. Sanchez expressed surprise over the Philippine National Railways’ (PNR) objection to the planned bidding of the HGC-owned 14-km long air rights starting at the junction of Samson Rd. in Caloocan to Sen. Gil Puyat Ave. in Makati. 

Sanchez disclosed that PNR general manager Ragragio wrote him on March 19 2012, regarding the bidding of a different property – the Paco Station. The PNR chief wrote to stress the strategic and historical significance of the Paco station. 

“In our letter-reply”, according to Sanchez, “we assured GM Ragragio that the commitment to the historical preservation of the Paco station is a precondition to the disposition of said asset”.

Both the Paco (Mall) station and the air rights were conveyed to HGC in exchange for assuming the guaranty obligations to investors in the 1996 Sariling Pabahay sa Riles housing project, a joint venture project among PNR, NHA, HUDCC

To recover HGC’s exposure, both properties and several other assets have been slated for disposition through outright sale, joint venture arrangement or other schemes.

Several firms had expressed interest over the air rights, mostly huge construction firms who see the assets’ value for an elevated expressway to connect the NLEX with the SLEX. Such firms include the Pangilinan-led Metro Pacific Investments Corp., FF Cruz & Co., MTD Malaysia and at least three other undisclosed firms represented by their lawyers.

PNR aired its objection to the air rights sale during the April 13 pre-bid conference held by HGC. Citing a memorandum of understanding (MOU) between HGC and PNR, a PNR lawyer present during the pre-bid conference invoked a provision that entitled PNR to buy back the air rights. However, according to HGC, said MOU covered only the disposition of the Paco mall and had already expired in September of 2009.

The buying of the bid documents has been extended until April 27, 2012 and the opening of bids has been rescheduled to June 5, 2012. This is to give other interested parties the opportunity to vie for the air rights for developmental purposes other than an elevated expressway.

HGC is mandated to mobilize private funds for housing by granting credit guaranty on loans extended by banks for home purchase and housing developments. Thus, its guaranty operations require ready capitalization.

“We can only do this through recovery of our previous exposures by speedy and effective marketing of our acquired assets” according to Sanchez.