Italpinas Development JV to develop P2.8-B condo in Palawan

Italpinas Development [IDC 1.17, up 13.6%; 435% avgVol] [link] disclosed that it entered into a joint venture with the owners of a two-hectare lot in Puerto Princesa, Palawan, to develop a mixed-use condominium project. IDC said that the project will cost a total of P2.81 billion to develop, but that its subsidiary, IDC Prime, expects a gross profit margin of 52.55% from the project.

MB bottom-line: Joint ventures like this are a great way for real estate development companies to “unlock” tricky pieces of land. By giving up a portion of the project’s end sales, IDC is able to secure the property and proceed with development without having to deliver dump trucks of cash to the property owners. Not only that but both the property owners and IDC are now aligned in terms of moving quickly to monetize the project. This model is one that we’ve seen used before by mid-level developers like Megawide [MWIDE 3.06, up 0.3%; 18% avgVol]; this is the business model that has enabled its new subsidiary, PH1 World Developers, to grow as quickly as it has. It’s a capital-light tactic that comes in handy here where land does not transfer as quickly and easily between parties as it might in other jurisdictions. 

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