Philrealty settles P329-M loan via dacion

Philippine Realty & Holdings Corp. has reached an agreement with two of its creditor-banks for the settlement of a P329-million loan by way of a dacion-en-pago or payment in kind scheme.

In a disclosure to the Philippine Stock Exchange, Philrealty said the two banks have also agreed not to charge interest on the loans from the time Philrealty filed its petition for suspension of debt payments.

The mode of payment is in line with Philrealty’s proposed rehabilitation plan, filed with the Quezon City Regional Trial Court, which provided three options to creditors for the full settlement of the company’s debts. These included the conversion of debt into equity, dacion en pago, and the full restructuring of the loans at softer terms.

Philrealty said majority of its creditor-banks have agreed to a dacion en pago mode of settlement, provided that the valuation of the properties is acceptable.

With regard to its remaining three creditor-banks, Philrealty said while they all agreed to a dacion en pago mode of settlement, the main stumbling block to the negotiations is the valuation of the properties offered for dacion.

Philrealty said that in the event that the remaining creditor-banks do not agree on the valuation of the properties offered for dacion, the court will have to settle the issue.

The company, however, is confident that it will reach an agreement with the remaining three creditor-banks for the restructuring of P500 million to P1 billion in debts.

Philrealty also disclosed that with the gradual improvement of the real estate market, third parties have expressed interest for joint venture agreements for the development of its Fort Bonifacio property.

"To date, there are ongoing negotiations with the said parties for an equitable sharing of proceeds from the said proposed joint venture agreements, which we plan to use for the completion of the Skyline tower of our Andrea North project in Quezon City," Philrealty said.

"We believe that we remain viable, with sufficient assets to support our continued operations. At the end of the second quarter of this year, our stockholders’ equity stood at P1.82 billion, which will be boosted by the expected reversal of interest expense that continued to accrue even after the filing of our petition for corporate rehabilitation," Philrealty further said.

Owing to tight liquidity problems as a result of the continued slump in the real estate industry since 1997, Philrealty sought a moratorium on the payment of its debts to prevent creditors from instituting foreclosure proceedings.

Philrealty has been hard-pressed to service its total P3.76 billion liabilities and finance its workingcapital needs.

Lacking the necessary funds, Philrealty has temporarily suspended the development and completion of real estate projects such as the Manila Golf Crest, Ivy League Square, and Urdaneta Country Plaza. The company likewise implemented cost-cutting measures including the reduction of its workforce.

Once a high-profile real estate company, the publicly-listed Philrealty is primarily known for its projects in the Ortigas Center, foremost of which is the Textite Towers – the headquarters of the Philippine Stock Exchange.

Its other projects and landbank include the Alexandra Condominiums in Ortigas, the Andrea North mixed-use complex in Quezon City, and lot properties in Tagaytay, Batangas, Quezon and Rizal.