CLI to issue P5B corporate notes to fund key projects

CEBU, Philippines — Listed Cebu Landmasters Inc is offering P5 billion worth of corporate notes to fund key projects, including a business park in Minglanilla town, Cebu.

In a disclosure to the Philippine Stock Exchange, the property firm said the Philippine Rating Services Corp (PhilRatings) has assigned an issue credit rating of PRS Aa with a stable outlook for its planned maiden debt securities offering.

CLI said proceeds will be used to partially finance its projects, including the Davao Matina Business Park and the Ming-Mori Technobusiness Park in Minglanilla, among others.

Obligations rated PRS Aa are of high quality and are subject to very low credit risk. The obligor’s capacity to meet its financial commitment on the obligation is very strong. A plus (+) or minus (-) sign may also be included in a rating to further qualify such.

Furthermore, an outlook is an indication as to the possible direction of any rating change within a one year period and serves as a further refinement to the assigned credit rating for the guidance of investors, regulators and the general public.

Philratings said a stable outlook is assigned when a rating is likely to be maintained or to remain unchanged in the next twelve months.

The rating and outlook reflect key factors such as sound management and strategy, with a competitive advantage in the Visayas and Mindanao markets; positive economic and industry outlook; continuously growing revenues and net income complemented by tax incentives, along with strong margins and returns; good coverage of interest and current debt, complemented by an adequate capital structure; and threats from a highly competitive market, with peers having access to significant capital and a substantial landbank.

As of end 2017, CLI has completed 15 projects, mix of offices, condos and subdivisions; and had 11 on-going projects located in Cebu (9), Davao City (1) and Cagayan de Oro (1).

Likewise, the company enters into joint ventures with partners to acquire prime properties in strategically identified locations. Around 20 percent of the company’s current project portfolio is reportedly from joint ventures.

The company adopted an “acquire-to-develop strategy” to turn around projects faster.

CLI has already begun buying land for its 2019 project lineup and has ongoing negotiations in new areas such as General Santos City, Butuan City, Ormoc City and Roxas City.

In 2017, CLI booked a 66.4 percent rise in total revenues, on the back of solid growth of real estate sales and rental income which expanded by 66.6 percent and 17.4 percent, respectively.

Net income also jumped by 66 percent to P1.29 billion while net profit margin stood strong at 33 percent.

According to the National Economic and Development Authority (NEDA), the target is for Central Visayas to expand by 7.5 percent to 8 percent during President Duterte’s administration.

As the fastest growing region with a growth rate of 7.5 percent from 2011 to 2016, Central Visayas bested the CARAGA region (7.4 percent), Davao (7.4 percent), Central Luzon (7.2 percent), and National Capital Region (6.6 percent).

The real estate sector in Cebu continues to grow with more available spaces in the office, retail and residential markets as the local economy is fuelled by tourism, the business process outsourcing sector, and household spending supported by remittances from overseas Filipinos.

Major developments such as the expansion of the Mactan-Cebu International Airport open more opportunities for Cebu to engage in international partnerships and investments, as well as boost foreign and local tourist arrivals.