MANILA, Philippines - Ortigas & Co. Ltd. Partnership (OCLP), banking on real estate as its driver of growth in the next five years, is preparing for its conversion into a corporation and a possible public listing next year as well as around P100 billion worth of projects in the next 10 to 15 years.
Outgoing chief operating officer Rex Drilon II said the conversion into a corporation and possible initial public offering (IPO) will provide the group with the funds moving forward. “By being a corporation, we will be able to grow faster and to be more profitable, REIT or not,” he pointed out.
A REIT (real estate investment trust) is a stock corporation established principally for the purpose of owning income-generating real estate assets. Under the REIT law, a REIT is required to distribute at least 90 percent of its distributable income as dividends to its shareholders annually. A number of real estate industry players, including Ayala Land, SM Prime, JG Summit and subsidiary Robinsons Land, Metro Pacific Investment Corp.’s hospital group, Araneta Group, Belle Corp., Waltermart and Puregold, have signified their intention to create REITs as a means of raising funds from the public.
OCLP is spending close to P100 billion in the next 10 years for various projects, of which P25 billion will be for the redevelopment of Greenhills Shopping Center (GSC); P25 billion for mixed-use project Capitol Commons within a 10-hectare property that used to house the Rizal Provincial Capitol in Pasig; over P15 billion for residential project Circulo Verde in Quezon City and P30 billion for Frontera Verde along C5 in Pasig.
Drilon, who is retiring after nine years as CEO, said the partnership has not yet decided on the final corporate structure, although earlier, it has created five special purpose vehicles – OCLP Holdings and four others for GSC, Circulo Verde, Capitol Commons and Frontera Verde.
So far, the P25-billion, 10-year redevelopment of GSC is on its initial stage. “We have already built the basement and later this year, we will be building the new Gloria Maris building. Once it is built, we will demolish the old Gloria Maris and then we will move Unimart to the spot where Gloria Maris used to be. Early next year, we will launch the first high end residential condominium where the parking lot is, which is in front of Fitness First and Sugi. VMall and Shoppesville will also be redeveloped. This will increase shopping space from 100,000 square meters to 300,000 sqm.,” Drilon said.
Earlier, Drilon said in an interview with The STAR that the redevelopment of GSC will consist of around eight phases. Phase 2 will include a new Unimart. Succeeding phases will include building a bigger tiangge in the old Unimart, putting up a new mall that would triple shopping space from the present 100,000 square meters to more than 300,000, increasing the number of parking spaces from the present 3,000 to 10,000, tearing up VMall (used to be called Virra Mall until it was refurbished at a cost of P400 million four years ago) and building a new one, building three residential towers and one office cum-hotel building, among others.
But Drilon stressed that all of these have to be done in phases so as not to disrupt the conduct of business at the shopping center.
In 10 years, all the buildings and structures that used to make up GSC will be gone, but Drilon promises that its character will remain the same.
For Circulo Verde, which will consists of 15 buildings totaling 5,000 units, he revealed that the fourth building will start next year while the fifth will start end-2011.
Meanwhile, the P25-billion Capitol Commons, a high-end mixed use development, will likely begin hopefully next year. For the 18.5-hectare Frontera Verde at the corner of Ortigas Avenue and E. Rodriguez Jr. Avenue (C-5) in Ugong, Pasig City whose anchor locator is the OCLP-owned and managed Tiendesitas, Drilon explained that this is an interim development. “We need to redevelop this into another mixed-use development. Once we are midway through Circulo Verde and Capitol Commons, or around 10 years from now, we will begin Frontera Verde’s development,” he said.
For Frontera Verde, OCLP also plans to put up two more buildings built-to-suit for BPO locators in the property.
Drilon said once the masterplans for Greenhills and Capitol Commons are finished, they will start preparing the masterplan for a new Tiendesitas as well as for the whole Frontera Verde property probably by next year.
While the group has not decided what the new Tiendesitas will look like, Drilon said there is a possibility that it will be something like GSC. “After all, we have been very successful with Greenhills. We know the technology. And we can replicate it at Frontera Verde. But of course, we have to consider the fact that Greenhills and Frontera Verde are not very far from each other,” Drilon explained.
The new Frontera Verde will probably cost around P30 billion.
“We still have 30,000 square meters of prime land in Ortigas Center that can easily keep us busy,” said Drilon, who will serve as OCLP consultant in the next 12 months to lead the corporate transition and eventual public listing.
For the first nine months of 2010, he said OCLP did better than than last year both in terms of top line and bottom line.
He also pointed out that real estate will be the group’s growth driver in the future. “While the shopping center has posted a growth rate of five percent every year and has been following inflation, we expect much more from our real estate business,” he said.
OCLP is also awaiting resolution on issues involving its “contingent assets.” The group is claiming ownership of the 18.5-hectare Payanig property in Pasig. “We have high hopes that the issue will finally be resolved with the appointment of Andy Bautista as the new PCGG commissioner. We will be happy with a 65-35 percent sharing,” Drilon revealed.
Other contingent assets include eight hectares of Camp Crame and 26 hectares of Camp Aguinaldo which was donated by the Ortigas family to the military many years back.
“Government has announced its need for more funds for the military. We have a concept that will allow us to help modernize the military and redevelop Camp Aguinaldo and Crame. But this will involve relocating the headquarters of the AFP and the PNP as well as the Aguinaldo golf course so a decision will have to be made by government not only for the 34 hectares that OCLP donated but the entire property,” Drilon added.