ETON Properties Philippines Inc., the real-estate arm of the Lucio Tan group, will beef up its leasing business ahead of its planned relisting in the Philippine Stock Exchange (PSE). Lucio Tan Jr., the company’s president, told reporters the company is changing its business plan to increase its leasing business from office, primarily from business-process outsourcing (BPO) firms and retail offerings.
“We want to have more leasing in our new business model,” Tan said at the sidelines of the company’s stockholder’s meeting last week.
Company officials said the leasing revenues for the year may hit P1.2 billion, from last year’s P740 million, as the company open up new buildings. According to Josefino Lucas, the company’s deputy COO, the company is not too aggressive on its residential business. At the moment, however, about 70 percent of income streams come from residential and 30 percent from leasing.
Lucas said that the company hopes to increase its leasing mix by 35 percent by year-end, and hitting the 40 percent in the succeeding years. “A 50:50 [mix of residential and leasing] might be [reached] over a five-year period. Large BPOs’ turnaround time takes two to three years,” Lucas said.
“We’re not being aggressive in residential. We’d like to build more on the recurring income by capitalizing on the BPO, and we think that’s where stable growth is,” he explained.
Residential of the business is cyclical, but Lucas said the company will continue building projects for residential projects for the trading gains. “We also want residential; we want sales so that there’s less demand for funding for retail component,” he said.
Last year, he said, the company mostly consolidated its business, as it prepares for the plans for the next five years.
Eton was delisted from the PSE in January 2013, after it was unable to comply with the regulators’ requirement of a 10-percent minimum public float rule. According to PSE rules, the automatic delisting is akin to involuntary delisting, and there will be a five-year relisting prohibition, or it cannot relist in the PSE for five years from the time it was delisted.
Eton said that it will spend some P28 billion in five years beginning 2015, some P9 billion will be spent for the year alone. At the moment, its leasing space is about 156,000 square meters and some retail.
Officials said the company would double that figure to about 300,000 sq m in two to four years for the planned projects.