Robinsons Land earmarks P13B for capex in 2012

MANILA, Philippines—Robinsons Land Corp. (RLC) has earmarked P13 billion for capital spending this year focusing on projects that will provide recurring earnings like shopping mall, hotel and office rather than residential developments.

“The property industry is currently experiencing fierce competition in the residential business with more developers offering aggressive financing to their buyers and allowing buyers to move in with minimal equity payments,” RLC president Frederick Go said in the company’s annual report to stockholders.

“Deciding to take a more conservative stance on the residential business, our company will instead intensify focus on our investment portfolio, which will expand our recurring income base. The expected continued rise in OFW [overseas Filipino worker] remittances, the expanding spending power of BPO [business process outsourcing] employees and the increasing number of travelers are changing the retail and hospitality industries landscape of the country and these are just at the early stages of this exciting development,” Go said.

RLC is set to open three new malls in 2012 and expand two existing malls, increasing its leasable space by 12 percent.  The new malls are located at Puerto Princesa, Palawan; Calasiao, Pangasinan; and Magnolia, Quezon City.

In 2013, it plans to open four new malls and expand another one.

To capitalize on the still booming BPO industry, RLC will complete Cyberspace Alpha and Cyberspace Beta – the only office buildings under construction in Ortigas central business district – by mid-2013.

“Still bullish on the prospects of the BPO industry, we are scouting for more land to purchase to expand our office building portfolio,” Go said.

Replicating the success of its first budget hotel, Mandaluyong Go Hotel, RLC will open four new Go Hotels this fiscal year 2012 in Puerto Princesa, Dumaguete, Bacolod and Tacloban, expanding RLC’s hotel rooms by 38 percent.

“We are seeing a rising trend in hotel occupancy rates even with more new hotel openings all over the country,” Go said.

The plan is to roll out 30 Go Hotels over the next five years, ideally adjacent to its shopping malls.

The capex budget of P13 billion for this year is the same as last year, according to Go, but the company spent P6 billion for landbanking in 2011. This year, Go said only P3 billion would go to landbanking so the company could effectively invest more in actual property development focusing on those providing rental and other recurring income.

About 66 percent of RLC’s business has been coming from these “investment” assets such as malls, offices and hotels with recurring earnings, and these are responsible for 81 percent of its profits, Go said.