LUXURY CONDOMINIUM developer Century Properties Group, Inc said in a disclosure that its board authorized plans to issue P2 billion of fixed-rate bonds, with an oversubscription option allowing for P1 billion in additional securities.
Proceeds of the company’s first-ever bond sale will go to financing projects due for completion between 2017 and 2019, involving 3,250 residential units measuring 90,000 square meters, Century Properties said in a separate statement. The offer will include three-year, five-year and seven-year issues, with pricing and other terms to be determined later.
The announcement signals broader access to the bond market for stand-alone property developers, giving them greater flexibility to build projects and at lower cost compared with other forms of debt. Support from bond investors would amount to a vote of confidence in the continued growth of the luxury property market, which is watched closely during economic expansions for signs of asset-price bubbles.
Developers traditionally raise funds via project loans from banks as well as deposits from home buyers. High-rise projects involve significantly higher costs because they are built on prime land, and run the risk of construction delays should a developer find itself squeezed for cash, making access to other sources of capital a critical advantage.
“This maiden bond issuance is a major milestone in our corporate history,” Jose Carlo R. Antonio, Century’s chief financial officer, said in the statement.
“It is in line with our strategy to diversify our funding base and pursue growth opportunities that enhance returns to shareholders over the medium and long term.”
BDO Capital & Investment Corp was appointed to manage the bond issue. BDO Capital & Investment Corp. and HSBC were also named joint underwriters and bookrunners.
Chairman and Chief Executive Officer Jose E.B. Antonio said in the same statement that “by 2019, Century will have completed 1.67 million sq.m. of development, consisting of 31 buildings and over 150,000 sq.m. of commercial space for lease. In addition, we have a land bank of 200 hectares to develop in Metro Manila, and are looking at other promising areas in the country. We are proud of what we have accomplished and are excited to continue the successes of years past.”
The company added that Credit Rating and Investors Services Philippines Inc. (CRISP) has assigned an ‘AA+’ issue rating with a stable outlook on the bonds due to “Century’s strong market presence, healthy financial position, and excellent land banking strategy.” CRISP assigns its ‘AA+’ rating to borrowers considered to have a very strong capacity to repay.
Century Properties has completed 25 condominium and commercial buildings, including Essensa East Forbes in Fort Bonifacio, South of Market in Fort Bonifacio, SOHO Central in the Greenfield District of Mandaluyong City, and the Gramercy Residences in Century City, Makati City.
In Friday trading, Century Properties closed unchanged at P1.37 apiece.
Source: Businessworld Online | June 21, 2014