Megaworld expands property business with P230-B capex

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MEGAWORLD Corp., the property business owned by tycoon Andrew Tan, is expanding its property business with a record capital expenditure of P230 billion to be spent within the next five years.

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In a briefing held after the company’s 20th listing anniversary in the Philippine Stock Exchange on Monday, Megaworld Senior Vice President Jericho Go said the real estate firm is allocating P230 billion capital expenditure in five years to expand its residential, office, hotel, commercial and retail projects in various townships in the country.

“We are very much on track in our aim to cement our leadership in the Philippine property industry,” Go said.

John Hao, Megaworld head of investor relations, said that this will be a record capital spending for the company given that its annual capex in the last five years ranged only from P20 billion to P24 billion.

With the P230 billion capex, the yearly budget of the company starting this year until 2019 will be approximately P46 billion.

Megaworld also plans to launch, on average, about 10 residential projects and six office towers every year.

Go said the listed property firm will try to branch out further in other areas in the country, not just in Metro Manila, which will remain a major area of expansion for the company.

“Metro Manila will continue to be a hotspot area (of new developments) because we have numerous townships here,” Go said.

However, he said the company needed to be flexible in terms of allocation of its projects across other areas in the Philippines.

“For the next 10 years, we will be spending P80 billion in our townships in Cebu, Davao, Iloilo,” he added.

In the next five years, Megaworld will also aim to boost its rental income from office spaces.

“It will be a significant shift. Right now, the income mix is 50 percent from residential spaces, 40 percent office spaces and 10 percent others,” Hao explained.

In the first quarter of 2014, Megaworld posted a record net income of P2.69 billion, 49 percent higher than the P1.81 billion net income in the same period in 2013, due to strong residential sales and rental income.

This year, Megaworld is set to complete the acquisition of a majority stake in Global-Estate Resorts Inc. (GERI), paving the way for completion of the consolidation process of all real estate businesses under the Megaworld brand.

At present, Megaworld wholly owns Suntrust Properties Inc. and majority of Empire East Land Holdings Inc.

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