Rental business drives Megaworld Q2 higher

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MEGAWORLD Corp. accelerated its earnings by 10% during the second quarter of 2017, on the back of double-digit growth in leasing revenues from its office buildings, malls and hotels.

In a regulatory filing, the Andrew L. Tan-led property developer posted an attributable net income of P3.61 billion, higher than the P3.28 billion it realized in the same period in 2016. Second-quarter revenues grew by 5% to P11.68 billion.

With this, Megaworld’s attributable net income for the January to June also registered an 11% increase to P6.44 billion, against the P5.81 billion it booked in the same period last year. Revenues for the first semester rose 6.2% to P23.24 billion.

The company attributed the positive performance to robust rental income from office, mall, and commercial space leasing.

“It has been a strong first half for Megaworld as we continue the trajectory of our rental income while maintaining revenues for our residential business. Across businesses, there is an indication that we will continue our double-digit growth until the end of the year,” Megaworld Senior Vice-President and Treasurer Francis Canuto was quoted as saying in a separate statement.

Rental income increased by 15% to P2.93 billion during the April-June period, pushing the first half figure 20% higher to P5.83 billion. The rental business got a boost after Megaworld breached the one-million square meter (sq.m.) mark in total leasable spaces last year. Of this, 851,000 sq.m. comprise office spaces while the remaining 273,000 sq.m. comprise of commercial and retail spaces.

“Megaworld remains to be the largest office developer and lessor in the country. We are well-positioned to retain this leadership as we are on-track to surpass the one-million square meter mark in office space inventory alone by the end of this year,” Mr. Canuto said. The bulk of revenues still came from the residential segment, which saw a 3% increase in sales to P6.76 billion in the second quarter. First half real estate sales inched up 1.4% to P13.62 billion.

Revenues from Megaworld’s hotel business, meanwhile, fell 2% in the second quarter to P313.19 million. However, revenues from hotel operations jumped 10% to P648 million for the first six months of the year. Megaworld targets to put up an additional 3,500 rooms in its hotel portfolio in the next five years, in a bid to position the hotel business as a major contributor to the company’s growth.

Megaworld currently has a total of 22 integrated urban townships and integrated lifestyle communities, spanning over 3,700 hectares of land across the country. Its biggest developments in terms of size are the 1200-hectare Twin Lakes in Tagaytay, Eastland Heights in Antipolo, Rizal with 640 hectares, and Suntrust Ecotown in Cavite at 350 hectares.

Last June, the company launched its first integrated township in Central Luzon called Capital Town, spanning 35.6 hectares with a total investment of around P30 billion. The estate will be constructed over the next 10 years.

Megaworld launched within the second quarter the 559-room Savoy Hotel Boracay inside its township Boracay Newcoast, which features the country’s first party pool arena.

Shares in Megaworld added 2 centavos or 0.41% to close at P4.90 each on Thursday. — Arra B. Francia