Sta. Lucia Land sets follow-on offer

Property developer Sta. Lucia Land Inc. (SLI) is preparing for a reinitial public offering to fund part of its P20-billion projected capital spending budget for the next three to four years.

The proposed follow-on offering—estimated to raise P5 billion to P6 billion—may be pursued next year, during which revenues from selling activities last year and this year would have started to kick in, SLI executive vice president and head of investor relations David dela Cruz said in an interview yesterday.

Even without raising capital from the stock market, Dela Cruz said SLI and affiliate companies had become one of the country’s biggest horizontal developers and tripled its balance sheet in the last 10 years. The group has developed 10,000 hectares of property all over the country, including 13 golf courses and subdivisions.

In the past, SLI and affiliates mostly relied on land developed through joint ventures, down payments made by lot buyers and concessions from suppliers.

While SLI has grown despite limited capital, Dela Cruz said it had lagged behind the growth of other property developers which tapped capital markets to fast-track their expansion.

“The mandate of the company to me is to tap the equities market,” Dela Cruz said.

In the last two years, SLI had acquired nearly 900 hectares of land on top of the about 1,200 hectares undertaken through joint ventures with prominent and landed families like the Lorenzos and Dizons of Davao, Aranetas and Enriles.

When SLI held nondeal road shows four or five years ago, investors mostly commented that the company was not borrowing enough to fund bigger projects. It had been advised to increase its return on equity, return on assets and overall balance sheet by borrowing.

SLI thus started raising funds from the local debt market, resulting in mostly clean or uncollateralized borrowings of P12 billion versus its equity of about P15 billion. This gives it more headroom to issue debt as bankers have allowed it to borrow as much as 1.5 times its equity.

“We’d like to tap the equities market to increase our balance sheet, therefore we can increase our borrowing capacity later on,” Dela Cruz said.

SLI has a public ownership of 14 percent but the controlling group—the Robles and Santos families—is willing to pare down ownership to 60 percent. At the same time, SLI has about 5.2 billion unissued primary shares which it can sell to the public, if and when needed.

“We still want to improve our company. We still have to improve our earnings and the quality of our assets,” Dela Cruz said.