Township pioneer Megaworld Corp. set its capital expenditure for this year at P55 billion, P10 billion less than in 2015, but still in line with the company’s five-year expansion plan, the company said on Monday.
The new capex allotment is the second tranche in Megaworld’s P285.8-billion expansion plan covering the years 2015 to 2019, with this year’s expenditure focused on further boosting rental income by building more malls and office buildings.
In a statement on Monday, Megaworld said the capex budget covers its subsidiary brands Global Estate Resorts Inc. (GERI), which develops tourism estates, commercial developer Empire East Land Holdings Inc., and affordable housing builder Suntrust Properties Inc.
Megaworld said 75 percent of its capital spending for the year is for building new malls, commercial centers, office buildings and residential projects within its township projects. Twenty-five percent will be for land acquisition and investment properties.
“We are bullish on the office and retail sectors because we see remarkable growth in these businesses,” Megaworld Senior Vice President Jericho Go said, adding the firm will also launch new township projects this year.
Megaworld’s first nine months’ income in 2015 jumped 12.52 percent to P8.35 billion on the back of a record 24-percent rise in rental income.
“We are on track in strengthening our office and mall portfolio, as we continue to experience robust demand for spaces, both office and retail, in our townships,” Go said in a previous statement.
“Both our offices and retail space enjoy a very high occupancy rate of around 99 percent across our developments.”
As such, the company is confident it would reach P11-billion rental income target for this year.
“We will certainly achieve the P11-billion rental revenue target by year-end,” Go said.
This year, Megaworld and its subsidiaries are set to launch 14 residential projects in Metro Manila, Pampanga, Iloilo, Tagaytay, Cavite, Davao, Baguio and Batangas.
The group is also launching 14 office towers, malls, and commercial centers in McKinley West, Uptown Bonifacio, the Mactan Newtown, Iloilo Business Park, Arcovia City, Southwoods City, and Alabang.
Earlier this year, the firm said it expects to add 650,000 square meters of gross floor area to its office and mall portfolio, as it completes more office and commercial developments this year.
In 2015, the Megaworld Group completed 16 residential projects and six office towers for business process outsourcing (BPO) companies, with retail components across its integrated urban townships.
While it focuses on ramping up its office and retail portfolio, Megaworld still plans to develop more townships, particularly, in Pasig City, Bacolod, and Pampanga this year.
To date, the firm has 20 integrated urban townships across the country, and its total land bank spans over 4,000 hectares nationwide.
Nine of these townships are in Metro Manila, while 11 are in the regions across the Philippines.
“Several townships are already mature, which means, we have already built in them the substantial components of a complete ‘live-work-play’ community, such as Eastwood City and McKinley Hill,” Go said. “We are moving towards making our other townships mature as well, especially those outside of Metro Manila.”
Megaworld is also one of the biggest property developers in the Makati Central Business District, the country’s premier financial center, with a total of 27 residential and office towers built so far.
Megaworld owns 100 percent of Suntrust Properties, 82 percent of GERI, and 82 percent of Empire East.
So far it has 350 residential, offices, and commercial towers built across the country.
The company said expanding its office, malls, and commercial center portfolio would drive its recurring income to grow by more than 20 percent by the end of 2016.
The company said it currently has over 150 companies in its portfolio of office tenants, most of which are from the Information Technology and BPO (IT-BPO) sector.
Among the tenant-companies are Accenture, Wells Fargo, HP, IBM, and United Health Group.
Go said Megaworld offers a “ready market” to its partner retailers, as its malls and commercial centers cater to residents and BPO workers, who live and work in its township developments.
“In McKinley Hill, for example, where we have around 80,000 BPO workers and 12,000 residents,” Go explained, “They are the primary customers of Venice Piazza, Tuscany and the upcoming Venice Grand Canal Mall.”