Italpinas shares jump on PSE debut

SHARES of Italpinas Development Corp. (IDC) surged on the real estate company’s stock trading debut amid a scant public float on Monday, riding on favorable growth prospects for the countryside.

Overall market sentiment was initially upbeat but some investors pocketed gains in intra-day trade, thereby curbing IDC’s rise after hitting the daily price ceiling.

IDC opened 50 percent higher at P5.40 per share on its inaugural trading at the PSE’s small, medium and emerging board from an initial public offering (IPO) price of P3.60 per share. IDC gave up some of its gains afterwards to close at P4.22 per share, rising by 17.2 percent and giving the company a market capitalization of P797.83 million.

The company raised P207.4 million shares after bringing about 26 percent of its outstanding stock to public hands.

“We’re looking into areas where the big guys are not yet looking,” Romolo Valentino Nati, an Italian architect who chairs IDC, told a press briefing. As such, the company is seen to have more flexibility to pursue projects at a much shorter time than the big developers.

IDC pitches “elegant architectural solutions and trademark contemporary aesthetic” while committing to environmental sustainability. It also seeks to deliver “maximum returns by seeking most promising local growth rates, such as those in hyper-prospective secondary and tertiary Philippine cities.” With a pricing point of about P1.4 to P4 million per residential unit, the company targets the broad middle market as end-users alongside real estate investors looking for rental income.

“We’re a big country so we think like a big country,” said IDC president Jose Leviste, noting that there were underserved areas in the country which were becoming lucrative for vertical developments.

Italpinas is led by a partnership between businessman Leviste and Nati.

“Coming from Italy, I’d say that we saw something that’s happening in the Philippines. If you think of Italy, it’s not only Rome and Milan, there are several cities and communities. I you think about Philippines, you think about Metro Manila and Metro Cebu but there are several cities that lack in inventory in terms of units. It’s a big market but you have to segregate (markets),” he said. “We like to go where there is enough demand but not enough supply.”

Because IDC focuses on vertical developments in areas where there is not enough supply of condominium units, it is estimated that net rental yields are attractive at around 7 percent or double the net yield in Metro Manila.

Over the long-term, IDC also plans to develop structures that would in line with tourism as well as to develop a bigger portfolio of rental assets from which it could unlock recurring earnings. IDC plans to venture into the serviced hotel-condotel business in the future.

Italpinas’ first real estate project was Primavera Residences in Cagayan de Oro City, a twin-tower mixed-use development. Its newest mixed-use project is Primavera City, which is also located in Cagayan de Oro. Based on its regulatory filings, it plans to enter the property markets in Lipa, Batangas as well as in Dumaguete in Negros Oriental, Iloilo City and Subic Bay Freeport.

The company is currently planning a pipeline of projects in diverse locations. it is in the process of acquiring a 1,796-square meter property located at San Rafael in Sto. Tomas, Batangas province. It also has a right of first refusal on an adjacent property with 5,347-square meters in land area.
Italpinas also holds a 25 percent stake in Constellation Energy Corp. which is into the development of renewable energy facilities.

Net proceeds from this offering will be used to boost capital expenditures for new projects, land banking and acquisition, retirement of existing obligations and for general working capital.

“I am optimistic that the capital raised from this IPO will help the company develop more functional properties with the goal of conserving the natural and manmade resources of our country,” PSE chair Jose T. Pardo said in his welcome remarks during the listing ceremony.