SMPHI ‘willing to wait’ for South Road Properties

By Malou M. Mozo
Sun.Star Staff Reporter

“WE are willing to wait.”

This was SM Prime Holdings Inc. (SMPHI) president Hans Sy’s response on queries about the company’s plan to take full control over the 295-hectare (ha) South Road Properties (SRP) in Cebu City.

To signify its confidence over Cebu’s bullish economy, he said SMPHI will not abort plans of long-term development strategies for SRP.

“We can’t make any move yet because we are still awaiting a formal position. There’s no firm offer. It has not reached to the level if we are developers or what. There are many things to settle like the master plan, price, technical details, etcetera, but we are willing to wait,” Sy told reporters.

Sy was in Cebu Friday for the soft opening of the SM City Cebu Northwing, which is a five-level annex to its existing 13.8-ha property at the Cebu North Reclamation Area.

He said the company’s multi-billion-peso offer, which includes “taking over the full obligation of paying” for the balance of Cebu City Hall’s P6.3-billion loan with the Japan Bank for International Cooperation, involves a mixed-use facility and an information technology (IT) park at the SRP.

“It will be another Mall of Asia type of development,” he said.

Capitalizing on the burgeoning growth of the IT sector, SMPHI initially offered a joint venture with the City Government to develop an IT Park within a government-owned lot, similar to that of the Cebu Provincial Government and the Cebu Property Ventures and Development Corp. (CPVDC).

CPVDC, a subsidiary of Ayala Land Holdings Inc., developed the Asiatown IT Park in Barangay Apas, Cebu City.

SMPHI earlier mulled plans to invest P2 billion for the construction of two more malls in the province. The company was eyeing the SRP as a feasible site for one of its malls.

Prospects

He said the construction of the two malls, which are expected to cost P1 billion each including the land value, will begin once SMPHI will find the lot for the projects. The plan is included in the project to put up four more additional malls in the Visayas.

Other prospective sites are Mactan Island and “a little bit farther than Banilad,” Sy added.

“We’re really serious and bullish about Cebu. In fact, it’s our priority area for Visayas and Mindanao projects,” he said earlier.

According to Sy, the company is in the look out for mall expansions, as it foresees growth in the country’s retail sector.

More malls, he said, helps decongest mall traffic.

SMPHI inaugurated last month its SM Bacolod branch in Negros Occidental, bringing to four the total number of malls in the Visayas.

In addition, SMPHI and the Iloilo government are now finalizing the bidding to develop a 54-ha lot of the Iloilo Airport for another mixed-use facility, which includes residential and IT park developments.

Meanwhile, the 10.9-ha annex in SM City Cebu, dubbed the Northwing, is estimated to cost between P200 million and P300 million and is expected to open next month.

It has 171 leasable spaces and has 148 tenants. Its parking spaces on three floors and the roof deck can accommodate about 1,946 vehicles.

The Northwing, which is designed for the upper class market, will house upscale shops, specialty shops, a comfort lounge, concierge, entertainment area and restaurants.

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Talk back: Stand on the South Road Properties

Sun.Star
Saturday, April 28, 2007

By Mary Ann de los Santos

(This letter is addressed to Pachico A. Seares)

IT pains me to note that you have not grasped fully my stand on the South Road Properties (SRP).

Let me tell you here and now that I am open to suggestions.

My idea to turn-over the SRP to the National Government is but one of the options.

To my mind, it is the simplest and most viable option for two reasons:

1. The SRP is covered by a sovereign debt with the Japan Bank for International Cooperation guaranteed by the National Government.

Legal complications can be avoided if the debt is assumed by the government instead of following Mayor Tomas Osmeña’s plan to sell it wholesale to the big taipans.

Besides, the National Government can later on deal with these taipans concerning the SRP in the same manner that Mayor Osmeña can.

But in the meantime, we will no longer be saddled with debt servicing and we can spend the savings on delivery of basic services and other necessary infrastructure projects.

2. Upon turning the SRP over to the National Government, we can undertake a Memorandum of Agreement that would give us some kind of control or participation in SRP’s development, something more difficult to do with private entities which have their own plan.

The SRP was turned over to the City in 2001 under the administration of Mayor Alvin Garcia.

During Mayor Osmeña’s first two terms, he did nothing to move the project forward.

I think five years is a lot of time for any mayor for that matter to market the SRP.

Instead of master planning and land-use zoning the SRP, the mayor has randomly constructed ill-conceived structures therein, including an ABC building, which is built probably in the most prime area of the SRP.

How can you market the SRP under these conditions?

I beg to disagree with your statement that “she doesn’t see it as most valuable real estate in Cebu, which it will be once it finally becomes hub of growth and progress of a city increasingly in need of more space.”

I`m sorry I cannot see your point.

SRP’s character “as a hub of growth and progress of a city increasingly in need of more space” is not lost even if it is turned over to the National Government.

SRP is here to stay; it cannot be physically uprooted from Cebu.

Once developed, all taxes will accrue to our city.

There will be no change except that the City will no longer pay P2 million a day in debt servicing.

Let me reiterate: I am open to other ideas on the SRP.

All I know is that the present course is not workable.

If we stay the present course, we will end up bankrupt or disposing the whole SRP in a fire sale, just like what Mayor Osmeña did on the City Hall block in the North Reclamation Area.

(He sold it to Robinsons at less than P12,000 per square meter.)

Let us get involved in our city’s future.

Let us think of alternatives and options to free ourselves from the debt quagmire we are in.

If you have better ideas, come out with it, I am open.

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Mary Ann wants nat'l gov't to take over South Road Properties

The Freeman 04/24/2007

Once elected mayor, Mary Ann delos Santos said she would turn over the 295-hectare South Road Properties to the national government so the city will no longer need to pay its daily debt of P1.7 million.

The barangay captain of Lahug announced this plan in a forum attended by different sectors wishing to know the program of government of her and reelectionist Mayor Tomas Osmeña.

Delos Santos believed that with the huge obligation to the Japan Bank for International Cooperation, it would be impossible for the city to progress whoever will sit as mayor.

She said it would be difficult for the city to pay its debt, which is now reportedly reached to over P5 billion, because it could not sell the SRP lots due to the ownership issue.

Tinago barangay captain Joel Garganera, an ally of Delos Santos, had filed a case against Osmeña and the city asking the court to prohibit them from selling the SRP.

Garganera argued that the SRP is still owned by the national government because President Gloria Macapagal-Arroyo had no congressional authority when she issued a proclamation order in 2005 transferring the ownership of SRP to the city government.

"Kon dili na kita mobayad sa tag P1.7 milyones matag adlaw, daghan na og kwarta ang syudad nga magamit alang sa mga basic services nga makahatag og kaayohan sa katawhan," said Delos Santos.

But Felix Taguiam of the Cebu Chamber of Commerce and Industry described Delos Santos' plan as "anti-business" that could be disadvantageous to the city.

In his reaction to the plan of Delos Santos, Osmeña said: "That's the difference between me and my political opponents. I like to build, they also want to destroy just like the old Ramos market building." - Rene Borromeo/LPM

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P20M case v. South Road Properties critic

By Katrina N. Tabanao
Sun.Star Staff Reporter

MAYOR Tomas Osmeña and the Cebu City Council are getting back at Tinago Barangay Captain Joel Garganera, as they countered with a P20-million damage suit for the taxpayer’s case he filed concerning the South Road Properties (SRP).

This way, the City Hall officials said, other people will be discouraged from filing any “unwarranted and malicious” suits against the Cebu City Government related to the 240-hectare SRP.

Last March 26, Garganera asked the Regional Trial Court to stop Osmeña, the council, the Cebu Investment Promotions Center, and the Register of Deeds from marketing, selling, disposing of or leasing the SRP.

He alleged that such moves are illegal since the presidential proclamation transferring ownership of the SRP to the City Government has no congressional authority.

City Hall’s countercharge was included in its opposition to Garganera’s application for the issuance of a writ of preliminary injunction and temporary restraining order (TRO).

Osmeña, through Acting City Attorney Rodolfo Golez, said Garganera must be compelled to pay P20 million in exemplary damages “because even if he knew very well from the start of the infirmity of his cause of action against the respondents, he still had the gall and temerity to file the unwarranted suit.”

This caused bad publicity for the SRP, which would result in turning off investors who may have been or are interested to purchase portions of the SRP, the city officials said.

“His acts amount to putting the Cebu City Government in a bad light before the international community, thereby causing losses in projected income for the City,” read their reply.

The City objected to Garganera’s application for a TRO and a writ of preliminary injunction, saying the issuance of such will be improper as it lacked requisites.

“Any restraining order or injunction against any portion of the SRP will completely eliminate the financial viability of the SRP and will certainly have far reaching consequences on the economic development and interest of the City in particular and the country in general,” the City’s reply said.

Garganera, in his complaint, said the SRP is classified as lands of the public domain, which means that it is owned by the state.

He cited the Supreme Court decision in Laurel vs. Garcia, which declared that “it is not for the President to convey real property of the government on his or her own sole will.”

City Hall lawyers, for their part, argued that if this is the case, then President Arroyo should be impleaded in the case because Garganera is questioning the acts of Arroyo, who issued Proclamation 843 that transferred the ownership of the SRP to the City Government.

Garganera also earlier said that the City’s lease agreement with Bigfoot Entertainment Inc. for two hectares of the SRP for a period of 25 years is illegal because it lacks public bidding.

But the mayor warned that he will hold the National Government responsible if transactions for the SRP are put on hold as a result of the special civil case against the City.

Osmeña said the Cebuanos may not know it but nearly half of the City’s loan payments for the SRP are considered income generated by the National Government.

As a guarantor for the 12.315-billion yen loan the City Government made, the National Government gets some P200 million a year from the City’s loan payment.

The mayor said, “If there’s no authorization to transfer ownership and the Philippine Government does not give the SRP to us, they are in violation of the bilateral agreement between the Philippine and Japanese Governments and that’s very, very bad.”

Only 2.7 percent of the total interest rate for the loan goes to the Japan Bank for International Cooperation and another two percent goes to the Land Bank of the Philippines, the conduit for the loan.

Bigfoot is leasing two-hectare of the SRP in the next 25 years at P5 million a year.

Also, the City is negotiating with other interested SRP locators such as SM Prime Holdings and Filinvest.

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