DMCI unit gets SEC nod to issue P1B in bonds

Consunji-led property developer DMCI Project Developers Inc. has obtained regulatory approval to sell up to P1 billion of its HomeSaver bonds, a filing with the Securities and Exchange Commission (SEC) showed.

The debt, which will be issued via an initial tranche of P500 million, aims to encourage retail investors to set money aside that will eventually be used as a downpayment for DMCI Homes projects. The company, for its part, said the money raised would be used for general corporate purposes and working capital.

DMCI Project Developers, which sells its projects under the brand name DMCI Homes, is focused on the middle-income segment, mainly targeting young families.

Based on the filing, the offer was set to run from Sept. 23 until Nov. 5, 2015. DMCI said the initial offer will be issued in three tranches.

It said tranche-A would be issued monthly for 36 months beginning initial issue date, tranche-B would be issued for 60 months and tranche-C would be issued on the initial issue date as a single upfront investment and payable in lump sum. The bonds will be paid a fixed-interest rate of 4.5 percent, 5 percent and 4.5 percent, respectively.

DMCI Project Developers is owned by the Consunji family’s conglomerate, DMCI Holdings Inc., where it is a major earnings contributor.

The builder’s net income in the first half of 2015 rose 4 percent to P1.72 billion, mainly due to higher realized revenues in 2015, DMCI’s latest financial statement showed.

Revenues increased by 8 percent due to the completion of Sorrel Tower, La Verti Residences, Wisteria and Marsala buildings of Verawood and The Amaryllis. Excluding the effect of a gain on sale of an undeveloped lot last year, net income rose 18 percent in the first six months.

Unlike local industry practice of using percentage-of-completion accounting, the company adopts a more conservative approach to recognizing real estate revenues by realizing sales only when the unit is fully completed and at least 15 percent of contract price has been collected.

A better representative of current demand would be sales and reservations for the period, which grew 4 percent from P10.1 billion in 2014 to P10.44 billion in 2015.

In the first half of 2015, the company has scheduled only one project launch with 965 residential units and 822 parking lots, with a total approximate value of P3.83 billion, which is lower by 43 percent compared to the previous year’s value of P6.69 billion for two projects.

Several projects are expected to be launched in the second half of the year, DMCI Homes said.