Ortigas parent firm sets P4-billion capex; plans P9-billion IPO

Posted at 04/12/2012 8:18 AM | Updated as of 04/12/2012 8:26 AM

MANILA, Philippines - Ortigas & Co. is spending close to P4 billion this year for capital expenditures involving a number of both existing and new projects, as its parent firm Ortigas Holdings Inc. expects to conduct an initial public offering (IPO) within the year to raise a minimum of P9 billion ($200 million) to finance future developments.

Joey Santos, general manager of the real estate division for Ortigas & Co., one of the few if not the only remaining partnership business entity in the country, also said that they are targeting around P3 billion this year in revenues, of which P1.5 billion to P16 billion will come from Greenhills Shopping Center. About P300 million will be contributed by the office group while the residential group will generate about P1 billion.

Santos revealed that they are also projecting a double-digit growth in their bottom line this year, from close to P1 billion last year.

He also said that Ortigas Holdings Inc., which owns Ortigas & Co., will most likely have its IPO this year given the ideal market conditions. CLSA has been tapped as advisor for the IPO, which will generate at least $200 million, the minimum listing price to make the IPO attractive and for the IPO to have an overseas component under the rules of the local stock exchange.

Eventually, Ortigas & Co. Limited Partnership (OCLP) will be dissolved and its assets transferred to Ortigas Hodlings Inc. OCLP is 60 percent owned by the Ortigas family (30 percent by the family of Francisco Ortigas and 30 percent by Rafael Ortigas), and 30 percent by HSBC.

Santos said they expect a good turnout for the IPO. “The property sector needs a compelling story. Investors like a mix of revenues. Our model is very close to some of the bigger property development companies – a good mix of development income and recurring income. The market likes business models like ours,” he pointed out.

Also yesterday, Santos revealed that about P600 million will be spent this year to finance part of the P2-billion cost of the new Unimart building at the Greenhills Shopping Center (GSC) which is undergoing a multi-year, multi-billion peso redevelopment.

The new Gloria Maris, which is being built at the open parking space, will open in June while the new Unimart building will be constructed at the site of the old Gloria Maris beginning this third quarter of this year. The cite of the old Unimart will house a new “tiangge” while the old “tiangge” will become an open air mall. The new “tiangge” will be around 40,000 square meters big. On top of the mall, a BPO building will be constructed.

In addition to the P600 million that will be spent for the new Unimart building, around P1 billion has been allocated this year for Viridian, the new residential development inside GSC.

For Frontera Verde along Libis which houses Tiendesitas, Santos said that around P500 million will be spent to build a second story for an existing portion of Tiendesitas.

Santos said that their current plans involve upgrading Tiendesitas, but eventually in 10 years’ time, the plan is to have a large retail development along C5 Road that will also include a residential component.

For Capitol Commons, Ortigas & Co.’s newest project located at the old site of the Rizal Provincial Capitol in Pasig, about P500 million in capex has been allocated this year for site development works. Work has commenced on the mall, which is expected to open in 2014.

Meanwhile, around P500 million in capex will be incurred this year for two buildings of Circulo Verde, Ortigas & Co.’s residential development in Quezon City. Capex for the two towers – Seville and Lleida – will be P500 million. Another P200 million will be spent this year to finish Ibiza and Majorca, the two other residential towers at Circulo Verde which are set for turnover this year. Seville and Lleida are scheduled for turnover in 2014 and 2015, respectively.

Another P150 million will be shelled out this year for the retail component of Circulo Verde, the 12-hectare residential project in Bagumbayan. The enhanced masterplan calls for the relocation of retail spaces from each tower to a 10,000-square meter stand-alone retail center. The retail component will cost a total of P300 million.

Santos also disclosed that about P100 million, or half of the P200 million cost of the new 137-meter bridge that will be built by the partnership for Circulo Verde, will be spent this year.

Ortigas & Co. is constructing a two-way steel suspension bridge called Circulo Verde bridge that would connect the project to Amang Rodriguez which is linked to Ortigas Ave. Construction will commence this year and the bridge will be ready by the end of the second quarter of next year.

Santos explained that the object of constructing the bridge is to mitigate traffic in nearby barangays and provide alternative routes to private vehicles going to Amang Rodriguez and parts of Ortigas Ave. extension.

The Circulo Verde bridge, anchored on Circulo Verde’s perimeter road, will have a capacity of at least 840 vehicles that could reduce traffic from Calle Industria and a portion of Ortigas Ave. extension by as much as 60 percent.