Mass housing developer 8990 Holdings and retailing tandem SM-Waltermart group have terminated their agreement to jointly develop shopping malls.
8990 Holdings president Januario Jesus Atencio said on Tuesday night that the joint venture deal had been rescinded by SM-Waltermart and that 8990 Holdings had been officially notified.
“This may be providential because this now opens the opportunity for 8990 to go into mall operations,” Atencio said.
The alliance with SM-Waltermart would have covered the retail component of two of 8990 Holdings’ township projects—one in Vitas, Tondo and the other in Ortigas Avenue Extension.
The Vitas property will have 35,000 square meters of gross floor area (GFA) devoted to retail while the Ortigas property will have 45,000 sqm in retail GFA.
Asked whether he was open to getting another partner for the shopping venture, he said: “We’re not looking but we’re open.”
The establishment of shopping malls in these two township developments will mark 8990 Holdings’ debut in commercial property development, which is expected to open recurring revenue stream for the housing developer.
Atencio declined to say why SM-Waltermart had backed out of the deal. But industry sources said the decision to rescind the deal might be to avoid the “cannibalization” of market share in other SM developments close to the two township projects.
In 2015, 8990 Holdings grew its net profit by 23 percent to P4.05 billion on the back of strong sales and increased construction capacity. This was on track with its P4-billion profit goal for the year.
This year, the company sees profit rising by 20 percent to P4.8 billion, driven by a projected 24-percent rise in revenue to P12 billion.
8990 Holdings plans to launch 14 new projects that will add 75,608 units worth P7.3 billion to its inventory this year.
For the fourth quarter of 2015, 8990 Holdings’ net income surged by 86 percent to P887 million as sales increased by 67 percent to P2.59 billion.
In 2015, revenue rose by 24 percent to P9.65 billion. Net margin was steady at 42 percent. In the last five years, the company posted a compounded annual growth rate of 42 percent in revenue.
Core business income expanded by 27 percent last year to P10.7 billion.
As of the end of 2015, 8990 Holdings had P19 billion worth of CTS (contracts to sell) in its portfolio under its in-house financing program called CTS Gold. Under this program, homebuyers are required to shell out at least 4 percent in equity with a five-year rebate of 1.5 percent for prompt payment. Effective interest rate is 9.5 percent per year. Qualified homebuyers are those earning at least P35,000 monthly while monthly amortization cap is equivalent to 33 percent of salary.