July 22, 2018, 11:40 pm
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Building on 45 years of legacy

With more than four decades and over 10,000 hectares of developed projects, Sta. Lucia Group through its publicly-listed vehicle Sta. Lucia Land Inc. continues to seek ways to catch up for lost time in terms of financing while ensuring that it sustains the legacy that it has built over the years.

David Dela Cruz, Sta. Lucia Land chief finance officer, said the company is raising P18 billion to P24 billion in the next three to five years to develop 2,000 hectares worth of properties it has lined up.

The goal, Dela Cruz said, is for Sta. Lucia to reach $500 million in market value also in three to five years, more than double from today’s $200 million.

While still using its tried and tested formula of buying properties or entering into joint venture arrangements with landowners and developing and selling lots only in horizontal communities, Sta. Lucia since going public in 2008 has become more open to exploring opportunities outside its comfort zone.

“The market is insatiable, there are a lot of projects. We just need to back it up with financing which the company did not do during the IPO (initial public offering) days in the 1990s,” said Dela Cruz.

In 2008, Sta. Lucia raised money through an IPO via backdoor listing. It then borrowed about P2 billion in 2011.

From P120 million six years ago, Sta. Lucia’s income rose to P800 million last year.

“That’s unprecedented. No other real estate company realized that much growth — compounded annual growth rate over 20 percent plus. It’s not because we are the most brilliant, but because we got the money,” Dela Cruz said.

Revenues went from less than a billion pesos to P3.2 billion over the past six years “because we started getting money,” he added. 

Now with debt of P12 billion of which P2 billion is short term, Sta. Lucia has caught up and now wants to raise more money, Dela Cruz said.

“Our balance sheet is not fully stretched we want a comfortable level of debt; we want to raise money through the equities market,” said Dela Cruz.

“For more projects ,we have an insatiable need for money. Our principals are going all around negotiating JVs and buying properties. If we are capable to sell and 

make a gross profit margin of 50 percent and we are borrowing at 4 to 7 percent that makes total sense as long as your balance sheet can take it. But we want to improve our balance sheet by selling some equity,” Dela Cruz added.

Sta. Lucia will raise P5 billion to P6 billion in the next 18 months through a follow-on offering and another P6 billion in debt. 

“I am confident whatever money we raise goes to projects that earn 50 percent… why not do that? When we raise (P6 billion) next year in the follow-on offer, our equity will get bigger and we will get more money for acquisition, we will have more room for debt,” Dela Cruz said.

“We are beginning to have that transformation but we still need a lot of money… we need P18 billion to P24 billion over next three to five years to develop the properties we have as JVs,” he added.

Dela Cruz admitted it was tough at first to transition and convince the once purely family-owned business to raise fund.

Over time, the owners — the Robles and Santos families — became receptive.

“When you start borrowing and getting investors, the (payback) is governance.

You have to improve internal systems, you have to be transparent and disclose everything,” Dela Cruz said.

Sta. Lucia is an excellent brand that has a legacy that it practically sells itself.

With its solid track record of transforming idle lands into thriving premium residential and commercial communities across the country, Sta. Lucia has been recently approached by the World Bank’s investment arm, the International Finance Corp. (IFC) for a possible investment of $25 million in the company, convertible into shares.

IFC invests in profitable and developmental endeavours especially in the countryside.

Dela Cruz said Sta. Lucia hopes to close the deal within the year.

Dela Cruz sees the entry of an institutional investor such as IFC as a “seal of approval, seal of good housekeeping” that will bring prestige to Sta. Lucia.

“That will be a big boost to us.

They might be the (the key) to move our price up,” he said.

About P20 billion is needed to cover the development of 2,000 hectares of land not just for horizontal but including a few vertical projects.

“That’s computing P1,000 or P800 per sq.m. development cost, some are more expensive… That goes to earth works, road, posts, fence, water, sewage, clubhouse. That’s just the back of the envelope computation,” Dela Cruz said.

Dela Cruz said Sta. Lucia has properties well positioned across the country, some of them seen benefitting from the Build, Build, Build infrastructure program of the government.

The company has commissioned property consultancy Santos Knight Frank to conduct two studies and appraise Sta. Lucia’s asset prices today and in relation to the Build program.

In Iloilo, land prices in Sta. Lucia projects tripled to P10,000 per square meter when a road was built. That was even before Build.

In Davao alone, Sta. Lucia has 10 to 15 projects.

“We are optimistic of our prospects this year as most of our projects are located in provinces where prices are not likely to be volatile. Add to that the decentralization push and the aggressive “ Build, Build, Build ” infrastructure program of the government, which are expected to unlock land values in the provinces. 

Our strategic landbanking, partnership with our marketing companies, and the commitment and dedication of our people are also expected to help drive growth for the company this year,” Sta. Lucia said in a statement.

Dela Cruz added: “The thrust now is expand and catch up and protect our areas. Big companies will soon go to the provinces. We want to fortify our position and build and buy as much as properties surrounding our (existing projects) because we are already familiar in the area… our sales people know the demographics, our engineers know the terrain.”

For now, Sta. Lucia is sticking to its business model of selling lots only, as this is more profitable, is low risk and easy to sell especially for its target market.

Michelle Robles, vice president for advertising and promotion, said Sta. Lucia has always won the hearts of professional overseas Filipino workers scattered all over the world.

“In our roadshows, we get inquiries from buyers who intend to invest in a property in provinces where they are from,” Robles said.

Sta. Lucia has also ventured into condominium development but future prospects would largely depend where opportunities are.

Dela Cruz said Sta. Lucia is also studying the idea of building homes for lot owners in existing projects. 

Another opportunity for Sta. Lucia is the development of its commercial lots, totalling 40 hectares in its existing subdivisions. These are ideal for retail and business process outsourcing offices.

To date, the group so far has only one retail development, Sta. Lucia East Grand Mall I Cainta, Rizal.

Sta. Lucia Land has, to date, developed over 250 pioneering , innovative projects spanning 10,400 hectares. It has built world class golf courses and country clubs, the first and most com prehensive commercial mall in the Eastern part of the metro, resort themed communities, lake developments, and residential condominium projects that are strategically located in 15 provinces in 10 regions. 

For 2018, Sta. Lucia targets to grow its sales by 10 to 15 percent on the back of new residential and commercial projects that we will launch this year.
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