Property developer Megaworld Corp. expects recurring earnings from its commercial property portfolio to reach P11 billion this year with the completion of additional office hubs and shopping malls.
The projected level of recurring earnings will exceed by P1 billion Megaworld’s earlier commitment to build up P10 billion in annual rental income starting 2016.
Although the company has yet to report full-year 2015 earnings, rental income was estimated to have reached P9 billion.
Recurring earnings are seen as a stable source of income—and therefore better cushion—in case the property cycle turns less favorable to residential development. Property developers with a good mix of development and rental income are typically favored by investors.
In a disclosure to the Philippine Stock Exchange Monday, Megaworld said it expected to complete more office towers, malls and commercial centers with a total gross floor area of more than 650,000 square meters by the end of the year. With this, the property developer sees its recurring income growing to more than 20 percent of total revenue by end-2016.
“We are on track in strengthening our office and mall portfolio as we continue to experience robust demand for spaces, both office and retail, in our townships. Both our offices and retail spaces enjoy a very high occupancy rate of around 99 percent across our developments,” Megaworld senior vice president Jericho Go said.
At least 10 office towers in Uptown Bonifacio, McKinley West, The Mactan Newtown and Iloilo Business Park are expected to be completed by the end of the year, adding a gross floor area of 287,500 sqm to Megaworld’s office property inventory.
The company has more than 150 companies in its portfolio of office tenants, mostly from the information technology and business process outsourcing (IT-BPO) sector.
Through the years, Megaworld townships have provided office space to some of the world’s biggest IT-BPO companies such as Accenture, Wells Fargo, HP, IBM and United Health Group.