Empire East allots P25 B for 5-year capex

MANILA, Philippines - Empire East Land Holdings Inc. of the Megaworld Group has allotted P25 billion in the next five years to launch and build new projects as it takes advantage of the property boom.

The middle-income developer of property tycoon Andrew L. Tan is also in discussions with Japanese gaming billionaire Kazuo Okada for luxury condominiums in the Entertainment City casino complex.

“We expect to spend P25 billion in capital expenditures over the next five years,” Empire East president Anthony Charlemagne C. Yu said during the company’s annual stockholders meeting.

Yu said this will be the largest five-year capital spending for Empire East, with P5 billion allocated for every year. This will allow Empire East to develop its 450 hectares of landbank in the next few years.

Empire East will source the funds from internally-generated cash and from proceeds from a share purchase of parent firm Megaworld Corp., Yu said.

Late last month, Megaworld bought P1.26 billion or 1.2 billion common shares in subsidiary Empire East as part of the consolidation of Tan’s property firms.

For this year, Empire East expects to post higher income due to strong economic growth and continuous cash flow into the property sector.

“We think we can beat the performance last year even with a very high rate of sales last year,” Yu said.

Empire East’s profits jumped 26 percent to P235 million last year from P186.1 million in 2011. Real estate sales climbed 40 percent to P1.38 billion from P983 million the previous year.

Empire East, which focuses on transit-oriented, township and mixed-use developments, nearly doubled its net income to P50.32 million in the first quarter compared with P27.74 million a year ago.

The property firm is also developing its sales force abroad amid higher demand from overseas Filipinos, Yu said.

For new projects, Empire East is in active discussions with Okada’s Tiger Resort Leisure and Entertainment Inc. in pursuing luxury residential condominiums in Entertainment City.

Yu said Empire East remains interested in the residential segment but it wants to make sure that Tiger Resorts will pursue the condominium projects.

In July 2012, Tiger Resort signed a deal for Empire East to “take the lead with a majority stake in the development of a luxury residential resort condominium project” along the coast of Manila Bay.

Empire East will build at least 25 upscale residential towers on a 12.95-hectare property within Entertainment City, the Philippines’ answer to the Las Vegas, Singapore and Macau gaming hubs.

Okada holds a license to operate a casino complex in the 120-hectare Entertainment City. However Gokongwei-led Robinsons Land Corp. and the Japanese billionaire called off their partnership for a $2-billion integrated casino project in May.

For its landbanking program, Empire East is looking for large lots in Southern Luzon and also in Northern Luzon given better access through expressways, Yu said.

From 2012 to May this year, Empire East acquired tracts of land including prime properties in Quezon City, San Juan, Parañaque and Las Piñas.

The Megaworld Group is composed of brands Megaworld, Empire East, affordable housing unit Suntrust Properties and tourism estate developer Global-Estate Resorts Inc.