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Concerts to comedies


WILBROS LIVE, a company known for promoting and organizing concerts in the Philippines, is taking a stab at film production with their first film venture, Fifth Solomon’s Nakalimutan Ko Nang Kalimutan Ka, opening Sept. 19 in cinemas nationwide.
“My brother and I have been thinking about [producing] movies since three or four years ago. It just never happened because we have so many concerts, but when we saw the story and the script, we knew it was the right one,” Glenn Llamas, COO of Wilbros Live, told BusinessWorld shortly after the media launch on Sept. 7 at Novotel hotel in Quezon City.
Wilbros Live is responsible for bringing in pop stars such as John Legend, who performed at the Smart Araneta Coliseum in March; and Mariah Carey, who will perform in the same venue in October.
The film—also Mr. Solomon’s directorial debut—follows a heartbroken woman Jaz (played by Alex Gonzaga) who tries to get over her ex-boyfriend (played by Vin Abrenica) by seeking help from a sketchy doctor (played by Candy Pangilinan) and from her best friend (played by Jerald Napoles).
Billed as a romantic comedy with a fantasy element thrown in, the film is, according to Mr. Solomon, based on his own and his friends’ experiences with heartbreak and moving on. He added that the script was years in the making.
“Imagine if there was a store where you can just go and get your [feelings] removed so you don’t feel hurt anymore,” said Mr. Solomon in the vernacular of the film’s premise.
Added Mr. Llamas: “We took the chance [on this film] because we’ve known Fifth (Solomon) for years… We’re happy with what we achieved in this film.”
Aside from a nationwide release, Mr. Llamas announced that they will also be holding screenings in the U.S., the Middle East, and Australia.
“Our core objective is to promote Filipino talents around the world,” he said, explaining that they are keen on producing films that they can distribute in Asia and other markets worldwide.
Choosing a romance as Wilbros’s first production, he added, gives the company a better shot at the box office. There are more than a few examples showing how much Filipinos love this particular genre: Star Cinema’s romantic drama film The How’s of Us, which stars Daniel Padilla and Kathryn Bernardo, premiered on Sept. 3 and has so far grossed more the P400 million according to a Sept. 8 post on Star Cinema’s website.
Kita Kita, a rom-com directed by Sigrid Andrea Bernardo and produced by independent production outfit Spring Films, replaced Jerrold Tarog’s Heneral Luna (2015) as the highest-grossing independent film in the country in 2017, after breaching the P300-million mark three weeks after its release.
“As long as Filipinos keep loving on these kinds of films, we’ll make it,” said Mr. Llamas.
“Next year, we’ll probably do a couple more films,” he said, adding that they are balancing the film production side of the company against promoting concerts, which is still their bread and butter. — Zsarlene B. Chua
Nakalimutan Ko Nang Kalimutan Ka hits cinemas nationwide starting Sept. 19.

PNOC scales down LNG project

By Victor V. Saulon, Sub-editor
PHILIPPINE National Oil Co. (PNOC) has scaled down its proposal to build a liquefied natural gas (LNG) facility in Batangas under a “solicited” process that allows the government corporation to set specifications for the $600-million project.
“We are just putting up an LNG hub,” said PNOC President and Chief Executive Officer Reuben S. Lista in a briefing on Monday at the company’s headquarters at the Bonifacio Global City in Taguig.
With the downscaled project, a previous plan to build a power plant as off-taker of the natural gas is put on hold. The Department of Energy (DoE) previously wanted an initial 200-megawatt (MW) gas-fired power plant alongside the LNG facility.
Instead of a land-based terminal, it will now be a floating storage regasification unit (FSRU) that also serves as the terminal for the imported LNG. Imported natural gas is liquefied for ease of shipping, then regasified or reverted to its former state in the country of destination.
The FSRU will initially have a capacity of 3-million tons per annum (MTPA), which can power a 3,000-MW power plant, should PNOC’s partner decide to put up a generation facility, Mr. Lista said.
The briefing was also attended by PNOC’s consultants from multilateral lending agency Asian Development Bank (ADB), the entity hired by the company to advise on the project.
“Within the next six months, we hope to complete the process. But definitely we will meet the guidelines dictated by the [Energy] Secretary [Alfonso G. Cusi],” Siddhartha Shah, head of ADB’s public-private partnership advisory services unit, said.
Mr. Lista said the FSRU’s capacity could be scaled up to 5 MTPA depending on future power demand.
“We have to finish this project before 2022,” he said.
The target date is ahead of the expected depletion by 2024 of the Malampaya gas find, the country’s only source of the fossil fuel that powers five gas-fired power plants in Batangas province with a combined capacity of 3,211 MW.
Mr. Lista said PNOC would come up within the month the specifications for the project for which interested private companies could use to submit their proposals. The submitted proposals would then be short-listed to come up with the best offer using financial, technical and legal criteria.
The prequalified proponents would be given 30 days to tender their final proposal, with the result coming out in three months.
“Ako, I’ll give it eight months,” Mr. Lista said about his expected final selection of a PNOC partner.
“We need a consortium to do this,” he said, adding that each member could have its expertise such as the builder of the hub, the distribution pipeline, and the anchor for the floating storage and regasification unit.
Glenda G. Martinez, PNOC senior vice-president for management services, said the development of the facility is “critical” for the country in view of the expected demand for electricity in the next decades.
“Not only will this terminal supply the existing gas-fired power plants and other industrial gas customers, it will also act as a hub for all other gas needs nationwide,” she said.
Ms. Martinez said PNOC conceptualized the Batangas LNG hub project to serve several purposes, including the government’s presence in a “nationally strategic infrastructure.” It will also give the government oversight or control over the construction, development and operation of the facility.
“A significant project at its infancy should not be left in the hands of the private sector,” she said.
Ms. Martinez said PNOC’s stake in the project, will be through its property, pipeline franchise, and even its banked gas. The stake, which Mr. Lista said would be a minority, would allow the state company to have a board seat or management representation.
The LNG hub was previously envisioned to be a government-to-government project, but failed to be included in the government’s investment priority plan for 2016, Mr. Lista said.
A subsequent process for an unsolicited proposal also failed as seven proponents failed to comply with joint venture guidelines as well as the provisions of the build-operate-transfer law, he added.

Demand from Chinese drives up rental rates in Makati, Bay Area

By Arra B. Francia, Reporter
CHINESE employees of offshore gaming companies are pushing rental rates by 30% to 50% higher in some residential condominium properties in the Bay Area and Makati City, as the offshore gaming sector continues to expand in the country.
This is according to the Philippine unit of real estate consultancy Colliers International, which noted that rental rates of residential units near offices of offshore gaming firms are commanding higher rents compared to the average rates in Metro Manila.
“In fact for a number of buildings, previously lease rates would be P1,000 per square meter (sq.m.) a month, but for the second quarter we saw one building in the Bay Area already charging P1,500, so that’s a 50% increase. That’s one sub-location that really recorded the fastest (increase),” Colliers Philippines Research Manager Joey Roi Bondoc told BusinessWorld in an interview.
In contrast, Colliers Philippines said average rents in prime three-bedroom units in Makati Central Business District (CBD) went up by 0.9% to P540-1080 per sq.m each month, while rents in Fort Bonifacio rose by 0.4%, according to its second quarter property report.
The company also reported that vacancy of condominiums in Metro Manila declined to 11.3% from 12.4% in the previous quarter. Vacancy in the Makati CBD alone went down to 11.5% from 12.3% quarter-on-quarter, while Fort Bonifacio’s dropped to 15.8% from 17.3% in the same period.
Colliers Philippines said it observed that condominiums in the fringes of business districts are attracting Chinese employees of offshore gaming companies. Gaming firms accounted for 25% of the total office space take-up in the first half of 2018 at over 180,000 sq.m., making it the second largest driver for office spaces during the period.
Mr. Bondoc said the confidence of these Chinese companies is tied with the country’s improving relations with China under President Rodrigo R. Duterte’s term.
“A number of offshore companies that closed with us are actually tied with the duration of the term of President Duterte. I’ll have to say that we’re good for the next three to four years,” Mr. Bondoc said when asked how sustainable the market for Chinese tenants is.
Even with a change in administration come 2022, Mr. Bondoc said the government should not change its openness toward Chinese gaming firms given their potential contributions to the property sector.
“There’s a spillover impact in residential, even leisure and retail. We’re seeing condo buildings near offshore gaming companies diversifying their retail mix, offering Chinese restaurants. It has tremendous multiplier impact, almost all properties are growing from a single sector,” Mr. Bondoc said.
With the entry of Chinese gaming firms, Colliers Philippines is recommending companies with ready-to-occupy units to target Chinese nationals.
“Condominium projects in the Makati fringe are particularly popular among these employees. Hence, developers with completed projects in the area should zero in on this opportunity,” the company said.

Honing Filipino YouTube creators


NOWADAYS, anyone with a smartphone can document their activities on video and put it online. Due to regular uploads and a developing following, an emerging creator can monetize the content that was produced initially as a hobby.
During a presentation at last week’s YouTube NextUp 2018 launch, Chris Klapwijk, YouTube manager and Artist Development Lead for Southeast Asia, said that YouTube has 1.9 billion monthly active users. Mr. Klapwijk added that 85% of Filipinos use YouTube to watch online videos.
Launched globally in 2011, YouTube NextUp is a program aimed to help creators develop their channels and YouTube career.
“We went from staying at home at 8 o’clock to watch a certain show to nowadays people want to watch what they want, where they want, and whenever they want. It’s really on the mobile first. That is one shift in technology that is taking place where we’re are just in the forefront because we are on people’s mobiles,” Mr. Klapwijk told BusinessWorld at the launch.
In YouTube, creators monetize their content by placing advertisements in front of their videos, selling merchandise (which they announce on their channels), and collaborating with brands.
Creators who wish to monetize their content must meet the requirements of the YouTube Partner Program. To qualify, a creator must have 10,000 channel views on his/her channel, 1,000 subscribers, and 4,000 hours watch-time.
These thresholds, Mr. Klapwijk explained, are in place to make sure that advertisers are paired with creators who are “serious about what they do.”
“It’s really trying to eliminate the ‘bad actors’ who maybe just occasionally upload something that is not even theirs,” he said, adding that creators who hit these thresholds can start earning on every video that they upload.
YOUTUBE NEXTUP 2018
In its second year in the Philippines, the YouTube NextUp program consists of 12 finalists who will go through a week-long creator camp on video production at the YouTube Pop-Up Space Manila at the BGC Arts Center until Sept. 12.
From 200 program applicants, the final 12 creators are: singers Carlyn Ocampo, Janine Teñoso, and Alicia Litonjua (Lesha); rock band Kithara; actor and comedian Stephen Flores (InReelLife); spoken word artist Beverly Cumla; vloggers Jam Raquion (Jam-packed) and Benedict Cua; makeup enthusiast Amy Talaboc; celebrity mom Melissa Ricks; interior designer Elle Uy (Elle Uy Décor); and figure skater Joel Minas.
The finalists all have channels with monetization enabled and a subscriber base of 10,000 to 100,000. They have all uploaded three videos in the last 90 days, and are of good standing (no guideline strikes).
“We want people to have already put some elbow grease into the game, so we can see that they are actually serious about it… We also don’t want people that are too experienced because we really want to help them through that journey,” Mr. Klapwijk said of the selection process.
The finalists will receive an equipment voucher worth P100,000, strategic account management from the YouTube Creator and Artistic Development Team, and a mentorship from program alumni and top creators.
“I think that the reason why we’re investing in these creators is that we see that they are serious in the message they [want to] spread, and this is just one way to help them spread that message.” Mr. Klapwijk told BusinessWorld.
YouTube NextUp, he added, helps creators take their channels “to the next level” and gives them the support they need to produce content on a more full-time basis. “That is one of the reasons why we get so excited about this,” he said, adding that YouTube also wants to “promote a healthy and diverse ecosystem.” — Michelle Anne P. Soliman

Puregold creates unit for remittance business

PUREGOLD Price Club, Inc. is going into the remittance business through a new subsidiary, PurePadala, Inc.
In a disclosure to the stock exchange on Monday, Puregold said its board of directors has approved the incorporation of PurePadala, Inc.
“In partnership with banks, financial institutions, and other financial technology entities, PurePadala, Inc. is intended to operate a cash remittance business for the benefit of the customers and shoppers of Puregold Group of Companies,” the Lucio L. Co-led company said.
Puregold said the establishment of the new subsidiary will be subject to approval of government regulators.
For the first six months of 2018, Puregold said consolidated net income grew by 24% to P3.08 billion from P2.48 billion a year ago. This was driven by a 13.2% jump in consolidated net sales to P64.03 billion.
“This was principally driven by the continuous organic expansion of the group’s grocery retail outlets on the back of a sustained strong consumer demand. This has been augmented by combined management strategies and programs to boost revenue contributions from both the base stores as well as new stores established during the first half of 2018,” the company said in a regulatory filing.
Puregold grocery stores contributed the bulk of revenues, or 79%, while the remaining 21% came from S&R membership warehouse clubs and S&R New York Style Pizza stores.
During the first half, Puregold and S&R’s same-store sales growth stood at 6.1% and 5.9%, respectively. The company said it benefited from higher consumer spending due to increased levels of take-home pay after the implementation of the Tax Reform for Acceleration and Inclusion law.
As of June 30, the company had a total of 393 stores, of which 341 are Puregold stores, 16 are S&R membership shopping warehouse, and 36 are S&R New York Style quick service restaurants.
Puregold earlier said it is on track to construct 25 new Puregold stores this year, in addition to two new S&R warehouses.

Melco Resorts PHL to delist from PSE

CITY OF DREAMS Manila was developed by Melco Resorts and Entertainment (Philippines) and Belle Corp. — AFP

MELCO RESORTS and Entertainment (Philippines) Corp. said on Monday it is voluntarily delisting from the Philippine Stock Exchange (PSE).
In a disclosure to the stock exchange, Melco Resorts Philippines said its board of directors had approved the voluntary delisting of the company’s common shares from the main board of the stock exchange.
The listed firm said its majority shareholder MCO (Philippines) Investments Limited will conduct a tender offer for up to P1,543,421,147 outstanding common shares held by the public at P7.25 per share. This represents 27.23% of the company’s outstanding capital stock.
Melco Resorts Philippines, which operates City of Dreams Manila, said the tender offer report will be filed with the PSE and Securties and Exchange Commission “on or around Sept. 17.”
For the first six months of 2018, the company reported its net income surged 437% to P1.89 billion, from P352.2 million during the same period a year ago, “primarily related to improved operating results as well as lower interest expense, net of capitalized interest.”
However, total operating revenues were 1% lower at P16.54 billion for the first half, due to the adoption of a new revenue standard “which resulted in higher commissions paid to gaming promoters being deducted from casino revenues.”
Casino revenues for the January to June period dropped 13% to P13.48 billion. This was attributed to the P4.2 billion “more commission paid to gaming promoters and complimentary goods and services deducted from casino revenues,” but was partially offset by higher casino revenues of P2.17 billion.
Revenues from the Nuwa hotel, Nobu Hotel and Hyatt City of Dreams, jumped 164% to P1.37 billion during the first six months of 2018.
On the other hand, operating costs and expenses dropped 9% to P13.56 billion.
Located inside the state-run Entertainment City, the City of Dreams Manila was developed by Melco Resorts Philippines alongside Sy-led Belle Corp.
City of Dreams Manila was the second integrated resort and casino to open in the area, after Bloomberry Corp.’s Solaire Resorts and Casino in 2013.
Shares in MRP rose 11.11% to close at P6.9 each on Monday.

Bustling condominium sector attracting more suppliers to Philconstruct Mindanao

DAVAO CITY — About 40 new companies joined this year’s Philconstruct Mindanao, pulled in mainly by the flurry of condominium projects in Davao City.
Patrick Lawrence Tan, chief executive officer of Global-Link MP Events International Inc. (GLMP) that organizes the event, said about 300 brands participated in the expo, held back-to-back with the Pack Print Plas and Manufacturing Technology Davao 2018 over the weekend.
Many of the participants are suppliers for finishing products such as flooring, various home equipment, air-conditioner, air filtration, and cleaning systems.
“There are a lot of air conditioning companies that are here, all the big brands. I think because they know the market is here and there is a lot of residential condos that are being built,” Mr. Tan said.
He said modern construction machinery and other related technology were also prominent at this year’s expo, the 9th staging of the event, not only for real estate projects but also for public infrastructure works.
“The industry is not only growing… if you look at the shows, it’s technology based. (And) unlike before it’s more of inquiry-based, but now it is different… The booths are displaying products that are suitable for the (Mindanao) market,” Mr. Tan said.
“Looking at the structures and land base… Most of the buildings are not high so the structural studies are quite different,” he added.
PhilConstruct also held the TechnoForum Mindanao, a series of seminars to provide a learning platform for over 8,000 trade professionals and buyers during the three-day show.
“The exhibitors see a dynamic economy in Davao and in Mindanao. They look at the potential, and in fact next year, the show will be split into two: one week after another because the event is growing and the markets are very dynamic. Construction is moving forward, real estate prices are growing… There is money going around here,” Mr. Tan said. — Maya M. Padillo

Gov’t makes partial award of T-bills as rates rise

THE GOVERNMENT made a partial award of the Treasury bills (T-bill) on offer yesterday, even with yields climbing across all tenors as investors await the possible rate hike by the local central bank following the faster-than-expected August inflation print.
The Bureau of the Treasury (BTr) raised just P13.47 billion during the T-bills auction on Monday, falling short of the P15 billion it intended to borrow.
This, even as the offer remained oversubscribed as total tenders amounted to P21.9 billion, lower than last week’s P27.5 billion.
Broken down, the government partially awarded the 91-day T-bills on offer, borrowing just P2.47 billion out of the P4 billion it wanted to raise. Total bids from banks reached P5.78 billion and the average rate picked up to 3.549%, 32.4 basis points (bps) higher than the 3.225% logged in the previous auction.
Meanwhile, the BTr awarded P5 billion as planned in the 182-day debt papers versus tenders totaling P8.075 billion. The average yield ended 25.2 bps higher at 4.353% from last week’s 4.125%.
The Treasury also borrowed the programmed P6 billion via the 364-day T-bills, with demand reaching P8.051 billion. The papers were quoted at 5.137%, up 23.8 bps from the 4.899% booked the previous offer.
At the secondary market ahead of the auction yesterday, the three- and six-month papers were quoted at 4.2804% and 4.4054%, respectively, while the yield on the one-year T-bills was at 5.4179%.
At the close of trading, all tenors rallied to fetch lower rates. The 91-day papers yielded 3.5298%, the 182-day debt fetched 4.368% and the 364-day T-bills were quoted at 4.9662%.
National Treasurer Rosalia V. de Leon said rates climbed across-the- board as the inflation figure triggered bets of another hike from the Bangko Sentral ng Pilipinas (BSP).
“What do you expect? [Investors] are already saying that the BSP should be hiking by another 50 basis points,” Ms. De Leon told reporters following the auction.
The average rise in prices of widely used goods picked up to a nine-year high of 6.4% in August due to higher food and oil prices. This was faster than July’s 5.7% as well as the 2.6% tallied in the same month last year.
On Friday, BSP Governor Nestor A. Espenilla, Jr. hinted on another round of tightening, saying that the monetary authority will take “strong immediate action” to respond to emerging threats to prices and inflation expectations.
Mr. Espenilla added that the Monetary Board may meet ahead of the Sept. 27 meeting to address such issues.
Ms. De Leon added that the elevated bids will likely persist until the central bank convenes since the market is expecting another hike.
“That would go on because they’re anticipating… Analysts would also want to see the BSP to anchor inflationary expectations,” she said.
Meanwhile, a trader said the Treasury tried to catch up with the bids given the “spike” in inflation last month.
“We saw a huge pickup especially in the 91-day [tenor] since bids are pulled back. They tried to catch up,” the trader said in a phone interview.
The government is set to borrow P300 billion from the domestic market this quarter through auctions of securities, offering P195 billion in T-bills and another P105 billion in Treasury bonds. — Karl Angelo N. Vidal

Two big voices belting on one stage

LANI MISALUCHA and Morissette Amon

A VERSATILE songstress often called “Asia’s Nightingale,” Lani Misalucha shares the stage with up-and-comer Morissette Amon in a two-night concert this Sept. 22 and 23 at the Theatre at Solaire Resort and Casino in Parañaque City.
The concert titled “A Lani Morissette: Musical Journey” (a play on the name of Alanis Morissette, the Canadian-American singer behind Jagged Little Pill) will consist of “unexpected song choices that showcase their versatility, vocal range and own style of performance,” said a press release.
Ms. Misalucha first burst into the Philippine music scene with her 1996 hit “Ang Iibigin ay Ikaw,” which was a finalist at the Metro Manila Popular Song Festival (Metropop) and the winner of the Record of the Year award at the Awit Awards in the same year.
Three years later, she once again entered MetroPop with the song “Can’t Stop Loving You.” This time, the song, written by Elzar “Dodjie” Simon, won the contest’s top prize.
Her career in the Philippines following her debut earned her more honors, including 1999’s Artist of the Year Award, Aliw Award for Best Lounge Act, Awit Award for Best Performance by a Female Recording Artist, and an Awit Award Nomination for Best Stage Actress for her role in S.K. Production’s musical play Rama at Sita, where she played the titular Sita.
She has released 15 albums so far and her hits include “Sana Dalawa ang Puso Ko,” “Bukas Na Lang Kita Mamahalin” and “Tunay na Mahal.”
In 2004, she moved her family to the United States and continued her career by performing in Las Vegas. Her stint there earned her another nickname: “Siren of the Strip.”
In 2008, she was voted the Best Singer (staff pick) in the 27th Annual Best of Las Vegas poll by the Las Vegas Review-Journal.
Meanwhile, Morissette Amon, gained prominence after joining the first season of ABS-CBN’s The Voice Philippines (the Philippine edition of the Dutch singing contest franchise, The Voice). Though she failed to make it to the finals, Ms. Amon eventually signed with Star Records, which produced her eponymous debut album. Her song “Akin Ka Na Lang,” which was part of Himig Handog’s 2014 slate, became popular because it showed her mastery of the whistle register.
“They’re asking for a showdown, although we don’t want the concert to appear like a showdown between Morissette and I, we might give the audience a little of what they’re asking for,” Ms. Misalucha said during the press conference on Aug. 21 at Solaire Resort and Casino.
Ms. Misalucha admitted that, at 46, she doesn’t have the same stamina she used to have. “I really need to prepare myself,” she said in the press release. Meanwhile, Ms. Amon is working on calming her nerves at the thought of sharing the stage with Ms. Misalucha. “She’s one of the music icons I really look up to,” said Ms. Amon of the older singer.
“I’m also very happy that we jive in so many ways—not just in our singing style but also our personalities,” Ms. Amon said in the release. — Zsarlene B. Chua
“A Lani Morissette: Musical Journey” will be held on September 22 and 23 at the Theatre in Solaire Resort and Casino. Tickets are available at Ticketworld: visit ticketworld.com.ph or call 891-9999.

Metro Pacific Tollways unit raises stake in Indonesian firm to 78%

A UNIT of Metro Pacific Tollways Corp. (MPTC) increased its stake in Indonesian infrastructure firm PT Nusantara Infrastructure Tbk, as the result of a mandatory tender offer.
In a disclosure to the stock exchange on Monday, parent company Metro Pacific Investments Corp. (MPIC) said PT Metro Pacific Tollways Indonesia (PT MPTI) now owns 77.94%, on a fully diluted basis, of the outstanding capital stock of PT Nusantara.
“As a result of the mandatory tender offer, a total of 3,760,231,769 PT Nusantara shares, which is equivalent to 24.68% on a fully diluted basis, were tendered at an approved price of IDR 211 per share,” MPIC said.
MPIC said the total cost stood at IDR 794.54 billion, which is equivalent to P2.86 billion.
In July, PT MPTI raised its stake in PT Nusantara to 53.26%, prompting the conduct of a mandatory tender offer. At that time, PT Nusantara’s minority shareholders collectively owned 44.21% of the firm, with the other 2.53% held as treasury shares.
PT Nusantara is involved in toll roads, water, energy, port operations and telecommunications. It operates a total of 34.47 kilometers in toll roads in Indonesia.
The partnership between MPTC and PT Nusantara comes as the former looks to expand its toll road business in Southeast Asia.
MPTC currently has a 29.45% stake in Don Muang Tollway Public Company Limited, a major toll road operator in Bangkok, Thailand, and 44.9% in CII Bridges and Roads, a firm with road and bridges projects in Ho Chi Minh City, Vietnam.
Domestically, the company operates the North Luzon Expressway, Subic Clark Tarlac Expressway, and Cavite Expressway. It also has three toll road concessions under construction, namely the Cavite Laguna Expressway, the Cebu-Cordova Link Expressway, and the NLEx-South Luzon Expressway Connector Road.
MPIC is one of three key Philippine units of First Pacific, the others being Philex Mining Corp. and PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

HK’s rich get richer flipping floors in property frenzy

IN Hong Kong, a city of property superlatives, add this one: World capital of flipping office floors.
Logistics heir Johnny Cheung Shun-yee made roughly HK$900 million ($115 million) in about nine months by buying and selling two floors of the city’s most expensive office building, based on estimates in local media reports.
Dubbed “Logistics Cheung” by the local tabloids because of his family’s Man Sun Logistics Ltd., the businessman sold the 49th and 50th floors of a 346-meter skyscraper called The Center in August.
He’s far from alone in chasing riches this way. Wealthy individuals and families are slicing and dicing office buildings that would be too expensive to buy outright, giving them access to a market unencumbered by government efforts to slow home-price gains. The value of so-called strata-title office deals in the Chinese enclave reached $3.8 billion in the first half, doubling from a year earlier, according to Real Capital Analytics.
Among the world’s biggest commercial hubs, only New York comes close to boasting similar volumes over the past half-decade.
Strata-title deals allow for separate owners of sections of buildings, as opposed to an entire property being owned by a single entity. Back in 1952, developer Ng Tor Tai started floor-by-floor sales in Hong Kong by asking lawyers to devise a new ownership structure for two of his buildings in Tsim Sha Tsui, according to C.K. Lau, head of valuations advisory services at Jones Lang LaSalle Inc.
The deals allow deep-pocketed investors to make quick profits in an office market where prices have more than doubled over the past decade, while still remaining cheaper than luxury housing on a square-foot basis. Office space has the added lure of lower stamp duties than in residential transactions.
Mr. Cheung was part of a consortium of investors which bought 75 percent of The Center from billionaire Li Ka-shing’s empire last year for $5.2 billion, the world’s biggest office property deal. The final group also included the “Minibus King” Ma Ah Muk, the “King of Cassettes” Chan Ping Che, and the “Queen of Shell Companies” Pollyanna Chu Yuet Wah, to use the nicknames local press have bestowed on them.
SELLING THE CENTER
Three consortium members, including Mr. Cheung, have since divested at least three floors and part of a fourth floor in strata-title deals, according to local media reports. The fourth floor was carved into 12 units, according to property broker Midland IC&I Ltd.
Mr. Cheung bought the Center floors for less than half the square-foot price of a typical luxury home, he said in an interview where he shrugged off questions about risks. “It’s a good investment. The Center is a grade-A office building in Central, after all.”
Office costs in Central, the main business district on Hong Kong Island, are the highest in the world.
Mr. Cheung sold the two floors for HK$50,000 and HK$52,000 per square foot, respectively, according to local media reports, which cited unidentified people. That adds up to HK$2.6 billion, based on the size of the floors. At a reported average purchase price of HK$33,000 per square foot, Mr. Cheung would have paid about HK$1.7 billion. Mr. Cheung, who still holds a third floor, declined to discuss details of the sales.
When it comes to the pool of families and individuals with enough money to do strata-title deals, Hong Kong has few peers. The city surpassed New York last year for the number of people with wealth of at least $30 million, according to research firm Wealth-X. The city’s individuals in that category numbered about 10,000. Hong Kong had 170,400 millionaires in 2017, according to Capgemini SE, or about one in 50 residents.
Wealthy people investing in Hong Kong’s strata office market usually have experience in real estate and often have backgrounds in metals trading or construction materials, according to Daniel Mok, director of capital markets at CBRE Group Inc. Individuals account for about half of the deals, he estimated, adding that “we have also seen some local families partner up to establish investment funds.”
In 2017, there were 205 strata-title office transactions of more than HK$30 million each, according to Colliers International Group Inc.
While the stamp duty on commercial purchases is capped at 8.5 percent, the rate can reach as high as 30 percent on residential deals. Selling residential real estate within six months of buying can incur an extra 20 percent tax.
With Chinese demand for commercial space showing no signs of weakening and limited new supply, speculators deterred by government efforts to curb prices in the residential market continue to flock to strata-title deals.
In April, the 34th floor of 9 Queen’s Road Central set a record square-foot price for a strata-title sale, surpassing the previous mark by 11 percent, according to Midland IC&I. Offices in the core business area, including Central and Admiralty, are particularly sought after.
“Investors can see that there won’t be land plots available for development in the near future, while rents in Central have been rising,” said Adrian Tang, head of Kowloon markets and strata-title office sales at Jones Lang LaSalle. — Bloomberg

RCBC offers first tranche of P20-B LTNCD program

RIZAL COMMERCIAL Banking Corp. (RCBC) has started its offer the first tranche of its P20-billion long-term negotiable certificates of deposit (LTNCD) program to raise funds.
In a regulatory filing on Monday, the Yuchengco-led bank said it will raise an undisclosed amount from the peso-denominated issue.
The issuance constitutes the first tranche of its P20-billion LTNCD program approved by the central bank last July 12.
The notes being offered will mature in five years and six months.
RCBC started offering the debt papers yesterday, with the sale to run until Sept. 21. The issue and listing date is targeted for Sept. 28.
The Hongkong and Shanghai Banking Corp. Ltd. will serve as the sole lead manager of the offer. It will also act as a selling agent alongside Multinational Investment Bancorporation, RCBC and RCBC Savings Bank.
Like regular time deposits offered by banks, LTNCDs offer higher interest rates. However, LTNCDs cannot be pre-terminated but can be sold on the secondary market, making them “negotiable.”
In June, RCBC raised P15 billion through a stock rights offer to strengthen its capital ratio and fund its business expansion. It also offered the second tranche of its senior unsecured fixed-rate notes worth $150 million in April under its medium-term note facility.
A number of banks have been tapping the capital markets in recent months to raise more funds ahead of tighter risk management measures that will take effect on Jan. 1, 2019 under the international Basel 3 standards.
RCBC posted a P2.2-billion net income in the first semester, down 6.4% from a year ago.
Shares in RCBC closed unchanged at P27.65 apiece on Monday. — K.A.N. Vidal

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