8990 Holdings: Housing the Filipino People

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In Photo: Bella Vista

THE financial crisis in 1997 and 1998 brought down many companies, among them property developers. Some of those that survive then became busy keeping themselves afloat.

Atencio
Atencio

Many of these firms, some noted for developing mass housing, decided to go up a notch to serve the higher class of the market, leaving a void in the industry.

The void, however, was so huge that it created a housing backlog in the country, which hit many of the working population.

It was this void that 8990 Holdings Inc. tried to fill. Over those years, the company has built mass-housing projects for the consumers, mainly geared for the simple employee who may not have savings to pay for high down payments for his or her own home but his or her salary is sufficient enough to pay for monthly amortization payments.

Its proposition was a hit both for its consumers and the government alike. Under 8990 Holdings CTS (contract to sell) Gold Program, its customers only pay a minimal down payment, and can quickly move into their chosen homes. These payments amount to about P10,000 to P25,000, and monthly equity payments afterward before it will be turned over to the bank or to the government-owned housing-finance agency Pag-IBIG Fund, or the Home Development Mutual Fund.

The company retains the ownership of such homes until full payment is made by the customer.

8990 Holdings program essentially facilitates the take-up by Pag-IBIG Fund home loans.

DCRR Angeles, Pampanga and Urban Deca Home Tisa
DCRR Angeles, Pampanga and Urban Deca Home Tisa

The company boasts of having a strong relationship with Pag-IBIG Fund, the primary government agency providing housing financial assistance to Filipinos through the long-established housing-loan program.

As such, it has structured its CTS Gold program so that the requirements for the product generally mirror the requirements for availing of a Pag-IBIG home loan.

“This is our way of helping the government in its land-reform program. We are giving land and homes to those who do not have,” 8990 Holdings President and CEO Januario Jesus Gregorio III B. Atencio said.

“And these are your regular employees [who] are not being served by other bigger property developers,” Atencio said.

8990 and all other mass-housing developers have a big void to fill, as there’s a mass-housing backlog of more than 3 million units. These figures will increase to about 6.3 million units by 2030, mainly driven by local demand.

During 2001 and 2011, only a total of 1.82 million of mass-housing units were built, according to government data.

DECA Homes Mactan and DECA Homes Mactan
Deca Homes Mactan and Deca Homes Mactan

At the moment, 8990 Holdings currently is the largest mass-housing developer in the Philippines in terms of units licensed, according to data from Housing and Land Use Regulatory Board.

The company has been developing mass-housing projects in high-growth areas across the Visayas, Mindanao and Luzon since 2003.

It became a publicly listed listed company through back-door listing through IT firm IP Converge Data Center Inc.

In May 2012 Iholdings Inc., Januarius Resources Realty Corp. and Kwantlen Development Inc. gained control of the company through the acquisition of 61.4 percent of the outstanding capital stock of the former information technology firm. In May 2013, in line with the objective to consolidate certain real-estate companies owned or controlled by Iholdings, Januarius and Kwantlen, the company acquired all of the outstanding shares in 8990 Housing Development Corp., 8990 Luzon Housing Development Corp., Fog Horn Inc., 8990 Leisure and Resorts Corp., 8990 Davao Housing Development Corp. and 8990 Mindanao Housing Development Corp.

On October 1, 2013, the Securities and Exchange Commission approved the change in its corporate name to the present one and the change in its primary purpose to that of a holding company.

The said firms now form part of now 8990 Holdings, and Atencio said these will be soon integrated into one. The company said it has benefited significantly from the industry experience of its three majority owners, who, prior to the establishment of 8990, developed their first mass-housing project in 1991 in Cagayan de Oro.

These principals include Mariano D. Martinez Jr., currently the company’s chairman; Luis N. Yu Jr.; and Atencio. The three have more than three decades of experience combined in the country’s mass-housing development.

As such, the company has built a reputation of providing quality and affordable homes to consumers in the fast-growing Philippine mass-housing market. Its brands include Deca Homes and Urban Deca.

Since 2003, the company sold more than 29,800 units, with approximately 19,000 additional units available for development and sale from ongoing projects.

The company also has an identified pipeline of projects with an existing and available landbank, which projects are scheduled to commence from now through 2019 and which, in total, are expected to provide approximately 64,000 units available for sale.

Calling itself a mass-housing developer, however, has its misnomers, but 8990 is quick to change that.

One is that its projects are for the poor who do not have a house. The company said its units, which cost an average of about P1 million per unit, are geared toward those who are currently working and only rents a small space. Its financing schemes are pegged to the salaried persons who want their own space to live in. 8990 is also placing facilities, such as a wakeboard park, in some its subdivisions, which are free to use by homeowners who are current in their payments. These facilities are not available in some projects of the socialized housing.

Another is that there is a belief that there are quality issues when you are a mass-housing developer. 8990 Holdings has introduced a pre-cast-construction process, which enables it to construct and complete residences ready for move-in much faster than under the conventional concrete cinder-block method. Through this process, the company is able to construct townhouses and single-story attached units in just eight to 10 days, with an additional five days for single-story houses with lofts.

Atencio said the precast system is far better than that traditional method of constructing houses. With this process, it allows the company to realize cost savings and enables it to turn over units to its customers in a fast and efficient way.

As a result of its precast system of building, it is expanding its horizon in developing medium-and high-rise buildings in urban areas, such as Metro Manila, where the, company said, one of its growth prospects lie.

The company began development of its first medium-rise mass-housing project in Cebu in 2012.

8990 Holdings has already trained its sights on expanding its mass-housing concept in the densely populated areas in Metro Manila, where mass-housing project are much needed.  Atencio said part of its push in the National Capital Region is to construct more medium- and high-rise buildings using the precast method

It already contracted Megawide Construction Corp. to do that job for 8990 Holdings, so it can focus on which project sites it will develop in the future.

The company said if it was able to cut the construction time for horizontal mass housing, it will also cut the time needed to construct a building.

Atencio said the aim was for the company to finish the construction of one building per quarter, at least for the next two years.

Its Metro Manila projects include a complex of high-rise residential buildings in Vitas, Tondo, Manila, and another in Ortigas Extension in Pasig City. Both projects include a small shopping mall, which 8990 itself will operate.

Of the two, only the Tondo, Manila, project has broke ground, and the company still has to sell the units there. 8990, meanwhile, still has to start the Ortigas project.

It also has a stand-alone condominium projects in Mandaluyong City and another in Cubao in Quezon City. Atencio said the company also has a string of land acquisition, just like the Las Piñas lot that the company plans to spend some P3 billion to also develop a complex of residential and commercial buildings.

Most of these projects will come on stream starting next year.

“We are actually trying to find the way if we can grow 100 percent in 2017 [from this year]. We are looking very hard, studying it very hard how we can double [our revenues],” Atencio said.

Atencio explained the company’s revenues are growing at a pace of about 20 percent annually since it became public in 2014.

For this year, it is targeting a 24-percent increase to P12 billion, from last year’s P9.65 billion.

At that pace of growth, the company’s revenues will increase to P14 billion by 2017. But Atencio said that amount is only being produced by its provincial projects.

“Another P14 billion will now be in NCR [National Capital Region]. If I am able to do that, so this year’s P12 billion (in revenues) becomes P28 billion by next year,” Atencio said.

“I got the landbank at 500 hectares,” he said. The said landbank came from the accumulated properties that it had over the years.

8990 is launching some 14 new projects with a total of 75,000 residential units all over the country this year, though the first phase will only cover 7,000 units with a combined sales worth of P7.2 billion.

Sales from previously launched projects are expected to take up the slack of the 2016 target, bringing the company’s sales to the P12-billion goal.

With all of these projects at hand, Atencio said the company will stay as a mass-housing developer and the operation of other facilities, such as a shopping mall and a hotel, will just remain on the sidelines.

“We’re not a property developer. We are a builder of homes. And that will be our focus over the years to come,” Atencio said.