GT Capital infusing P1.1B in equity into Federal Land

Conglomerate GT Capital Holdings is infusing P1.1 billion in fresh equity into wholly-owned Federal Land Inc. to position the property arm for further growth amid a fast expanding domestic economy.

In a disclosure to the Philippine Stock Exchange on Monday, GT Capital said it had executed an agreement with Federal Land to acquire 11 million additional common shares from the latter’s authorized capital.

After the P1.1-billion equity infusion, Federal Land’s capitalization will increase to P14.9 billion, based on industry estimates.  Because the property firm is already 100-percent owned by GT Capital, the capital hike will not result in any change in equity control distribution.

“This (the capital increase)  is primarily (intended) for funding both land acquisition and project development,” said a source privy to the transaction.

“It’s an indication that Federal Land is gearing up for more projects in the pipeline,” the source added.

By boosting Federal Land’s equity base, the property firm is likewise increasing its capacity to take on additional debt if and when opportunities arise, potentially locking in cost at record-low interest rates.

Earlier this month, Federal Land raised P5 billion from the sale of debt paper to selected institutional investors. The notes have tenors of seven and 10 years and carry a fixed rate.

The fundraising was expected to allow Federal Land to capitalize on robust real estate demand fueled by the strong economic wave currently enjoyed by the country.

The property developer reported a steady surge in market demand for high-end, middle-end and affordable projects, from the western part of Metro Manila to the eastern section.

Federal Land, which has been in the property business with focus on the residential segment for more than 40 years now, is also involved in commercial developments and master-planned communities.