FARMING products distributor Calata Corp., which is embarking on a major diversification into property development, expects to secure a gaming license from the state-owned Philippine Amusement and Gaming Corp. (Pagcor) to proceed with a P65-billion integrated gaming resort project in Mactan, Cebu, by the end of 2017.
Calata also expects to own 51 percent of a real estate and investment trust (REIT) that will hold property assets of the proposed integrated resort in Cebu, to be called “Mactan Leisure City.”
The project is planned under a recently signed partnership with Sino-America Gaming Investment Group LLC (Sino-America) and Macau Resources Group Ltd. (MRG). The integrated resort is intended to rise on a 14-hectare property on Mactan Island and feature three hotels, a casino and entertainment complex, commercial, retail and conference facilities and a yacht club.
Calata said the parties were planning to form a corporation by September. “Thereafter, the parties will pursue the corporation’s transformation into a REIT and execute such plan at the soonest practicable time,” the disclosure said.
The REIT structure gives investors the option to invest directly in the finished products that are already earning money—such as residential and office units, hotels or shopping malls or even infrastructure ventures like toll roads and power plants—and not just the property developer itself. This is meant to attract investors because the Philippine REIT law of 2009 requires the distribution of 90 percent of income annually. At present, however, restrictive implementing rules on the REIT prevent this asset class from taking off in the Philippines.
Subject to the issuance of construction permits and Tourism Infrastructure and Enterprise Zone Authority (Tieza) approval, site work on the Mactan Leisure City is targeted to begin in January 2017 and be finished by the middle of 2020.
The Macau Group and Sino are expected to infuse P836.1 million into the Mactan Leisure City project, of which P234 million will be put into Calata, which, in turn, will invest the funds in the corporate vehicle. The remaining P602.1 million will be directly infused into the corporate vehicle that will be majority-owned by Calata.
In line with its expectation to secure a gaming license from Pagcor by end-2017, Calata said “letters of no objection” and support–which are long-standing mandatory Pagcor application requirements for all gaming projects outside of Manila’s Entertainment City–had been issued by the governor of Cebu, the mayor of Lapu-lapu City, business and civic groups and the Church. The group has likewise obtained resolutions of no objection from the City Council of Lapu-lapu City and the Barangay Council of Barangay Mactan, citing the result of development activities in the last 24 months.