Calata Corp., an agribusiness firm diversifying into the casino sector, is set to create a real estate investment trust (Reit) in the agriculture sector after its casino project is finished by 2020.
Calata entered into a joint venture with Sino-America Gaming Investment Group Llc. and Macau Resources Group Ltd. (MRG) to build the P65-billion Mactan Leisure City, a 14-hectare planned integrated casino, resorts and hotels complex to be located in Lapu-Lapu City, Mactan Island, which is expected to be completed by mid-2020.
A cash advance of P234 million from the Sino group will be invested in Calata Land Inc., a Reit which will hold and pay for the “acquisition of the land to be leased” to the Sino group’s Philippine unit Macau Leisure City Management Corp. (MLCMC).
Calata Land will be 51 percent owned by Calata, 35 percent owned by the Sino Group, and 14 percent owned by Calata President Joseph Calata.
“We still like agriculture to help farmers. We like to have one big farmland, then we’ll put it under a Reit. So it’s part of the plan,” the Calata president said in Filipino.
“(The partners) are willing to invest in agri projects, not only in casino. It just so happens that this (Mactan Leisure Casino) project was the first one,” he added.
Calata said the group would focus first on completing the Cebu casino project by 2020, after which will proceed with the agri Reit formation and venture.
The agribusiness firm said the casino arrangement between Calata Land and MLCMC will have an annual rent equivalent to $2 million or about P95 million payable twice per year, with the first payment due 42 months from the commencement of the casino complex project.
Calata earlier said that once Mactan Leisure City is operational, “rent ceiling will rise to 1.5 percent of EBITDA (earnings before interest, tax, depreciation and ammortization). Current projections anticipate a $320 million EBITDA.”
This is a usual arrangement in integrated casino developments where international casino operators sign long-term lease deals with local property companies for the establishment of the casino complex.
As previously disclosed, Calata said funding for Calata Land will be coming from the Sino group’s $13-million loan, as well as the $5 million or P234-million cash advance to be converted into Calata equity. The P234-million advance is part of Sino group’s initial investment of around P836.1 million into the Mactan Leisure City project.
Calata also said it plans to start construction of Mactan Leisure City in January 2017, while it secures permits with Philippine Gaming and Amusement Corp. (Pagcor) and Tourism Infrastructure and Enterprise Zone Authority (Tieza).
Management consulting company RiskWise Global Capital Inc. will handle the business activities and transactions under the Mactan Leisure City venture.
RiskWise also presents business opportunities for Calata as it will introduce Calata to “co-developers from Israel, USA, and Australia to develop agricultural communities and industrial agricultural projects.”