SUNTRUST Home Developers, Inc. has signed a lease agreement for the site of its planned hotel casino within the Philippine Amusement and Gaming Corp.’s (PAGCOR) Entertainment City in Parañaque City.
The listed firm told the stock exchange on Monday it had entered the lease agreement with Westside City Resorts World, Inc. and Travellers International Hotel Group, Inc. last week. All three companies are affiliates of Andrew L. Tan’s Megaworld Corp.
The deal covers the multi-year lease for the project site where the Main Hotel Casino of Megaworld’s 31-hectare Westside City will be built. The site was previously identified as three parcels of land at the Manila Bayshore Integrated City in Parañaque City.
Suntrust is a 51% owned subsidiary of Hong Kong’s Suncity Group Holdings, Ltd. after the foreign company acquired a majority stake in the local firm last year, marking its first venture into the Philippines’ gaming sector. Megaworld maintains a 34% stake in Suntrust.
The lease agreement signed last week is now subject to the approval of Suncity’s shareholders and permits from Philippine authorities. In Suncity’s disclosure to the Hong Kong Stock Exchange, it said the rent for the project site is $10.6 million annually, derived from an indicative market value of $340 million.
Lessors Westside and Travellers must obtain clearance from the Philippine government allowing Suntrust to be the developer, exclusive operator and investor of the Main Hotel Casino. This includes having the “absolute right to conceptualize, design, develop, construct, maintain, operate, invest in and/or finance” the project.
A co-development agreement for the Main Hotel Casino was signed between Suntrust and Westside in October last year, around the same time Suntrust announced the entry of Suncity as investor. The agreement spells the terms for the project site lease, appointment of Suntrust as the hotel’s exclusive operator, revenue sharing once it starts operations, and development and construction financing for the project.
It says Suntrust will give Westside 1% of the gross gaming revenue on VIP of the casino of the Main Hotel Casino and 3% of the gross gaming revenue from slot machines and mass market tables. Suntrust will also finance the development and construction of the project by raising not less than $300 million within five months from the signing of the co-development agreement, where $200 million will be paid to Westside for the project site.
The Main Hotel Casino is envisioned to be a five-star hotel with at least 400 rooms and a casino establishment with about 400 gaming tables and 1,200 slot machines. It will be part of Megaworld’s Westside City, which it describes in its website as a “casino-filled entertainment city” with 4,000 residential units, entertainment facilities and luxury mall and hotels.
Shares in Suntrust at the stock exchange dipped one centavo or 0.62% to P1.6 each on Monday, while shares in Megaworld shed 13 centavos or 3.42% to P3.67 each. — Denise A. Valdez
