Ortigas allots additional P20 billion for Greenhills redevelopment

MANILA, Philippines - Ortigas & Co. may spend another P20 billion for the next phases of the ambitious Greenhills Shopping Center redevelopment that will include the construction of residential condominiums.

In an interview, the company’s chief officer and general manager Joey Santos of the real estate division revealed that the amount will be on top of the P20 billion already allocated for the first two phases of the Greenhills facelift.

Santos also revealed that they are projecting a 20-percent increase in both revenues and bottom line in 2010. Last year, the company generated revenues of over P2 billion, while net income was over P600 million.

He explained that the increase is largely due to the fact that it will only be this year that sales from the two towers of Circulo Verde (Majorca and Ibiza) will be booked. “The income from the second call center building that we put up at the Tiendesitas area will likewise be booked this year.”

Of the company’s total revenues, around 70 percent is derived from leasing while the rest is from development income (mainly from sales of residential units). Of the leasing revenues, around 80 percent comes from the shopping centers at Greenhills and Tiendesitas.

Following the reorganization, Ortigas & Co. will become a holding company with a three-hectare property in Ortigas Center as its major asset. This, Santos said, would pave the way for the 79-year-old firm to “take the natural progression that most companies took.”

Ortigas & Co. is in the process of transforming itself from a limited partnership to a corporation, starting with the establishment of four wholly owned units that might be eventually listed in the local bourse.

So far, the company has spent around P3 billion for the renovation of almost all buildings in the Greenhills Shopping Center.

According to Santos, the 40-year-old Unimart grocery building will be torn down and a new one will be constructed. A new Virra Mall building will likewise be put up. Several new buildings will be constructed over the next 10 to 15 years, including one that will house residential condominiums.

Also to rise is the new Music Museum, a 1,200-seat performing arts theater beside the Promenade.

The redevelopment of the Greenhills Shopping Center aims to double the retail area available for lease, which in turn will increase revenue stream. The shopping center currently has 100,000 square meters of shopping area.

Earlier, company chief operating officer Rex Drilon said Phase I of the redevelopment of the 16.6-hectare Greenhills complex will involve putting up a new Crossroads building at the site of the existing two-story Gloria Maris building. The first phase will begin this year.

Ortigas & Co. has the biggest landbank in terms of direct holdings of premium land. It owns around 58 hectares, all north of Pasig River (Mandaluyong, San Juan, Pasig, Quezon City). A 76-percent-owned subsidiary, Concrete Aggregates, has a 200-hectare property in Angono which is being quarried by La Farge. “After 15 years, we can develop that into a residential area,” Drilon said.

Aside from the Greenhills complex and the Quezon City development, Drilon disclosed that they are also looking at developing a company-owned property in front of the Asian Development Bank headquarters.

Drilon said all the existing structures in the Greenhills complex will be torn down in phases so as not to disrupt the conduct of business in the area. In addition, three residential towers and one office-hotel building, as well as a two-level basement parking that will increase the number of parking slots from the present 3,000 to 7,000, will be constructed.

The second phase will involve building a new Unimart, Drilon disclosed.

The redevelopment of the Greenhills Complex, owned by the Ortigas Group, will be financed via internally generated funds. “Greenhills has a good cashflow,” he said.

The new complex, Drilon added, will have twice the number of spaces available for “tiangge” or stalls for lease.

Also, Santos said the company will continue the first phase of development at Circulo Verde, its largest residential project in Bagumbayan, Quezon City, with two new residential towers.

“We are on time. We have completed the foundation of the first two towers (Majorca and Ibiza) last year. Sales have also continued to be very good with Majorca already sold out and Ibiza with a few units left,” he said.

The P15-billion Circulo Verde project will have 15 residential towers. Phase I will be finished in five years.

Drilon earlier said there remains a 1.2-million shortage of units in the mid-market, consisting of residential units with prices ranging from P2 to P6 million, which the firm intends to address with Circulo Verde.

“Even if you look at all the projects going on at this time, we are nowhere close to addressing the housing gap. And while there are many ongoing projects, we believe that we are able to offer something different,” he pointed out.

It is estimated that the backlog for the low-cost sector is around 3.6 million, and for the mid-market, 1.2 million. The higher end is well covered, Drilon said.

The company intends to continue development inspite of the adverse economic environment. “We’ve been in this game long enough and have built many residential communities like Greenhills and Wack-Wack. We will probably have a hiccup in the next two years, but after that, things will go back to normal,” he said.

“The average industry take-up last year was about 500 to 600 condo units a month. That shows how much is moving. And, if the shortfall is 1.2 million units, there should still be a lot of opportunities,” Drilon added.

Ortigas & Co. is in the process of turning itself into a holding company, planning the creation of four new firms that will handle its assets and eyeing an eventual listing on the stock exchange.

A new company, Circulo Verde Development Corp., had been incorporated to handle the Circulo Verde project.