Global-Estate Resorts, Inc.

16th Floor, Alliance Global Tower, 36th Street corner 11th Avenue, Uptown Bonifacio, Taguig City, 1634, Metro Manila

Financial Highlights:1

Global-Estate Resorts, Inc. (GERI) is engaged in the development of integrated tourism estates and integrated lifestyle communities with residential, office, retail, hotel and/or leisure components. It was incorporated on May 18, 1994 originally, as Fil-Estate Land, Inc. (FELI) to consolidate the real estate interests of the Fil-Estate Group of Companies and was listed in the Philippine Stock Exchange in November 1995. It was re-launched as Global-Estate Resorts, Inc. when Alliance Global Group Inc. (AGI) acquired a majority stake in FELI in January 2011 to engage in its current business. In a move to consolidate all AGI’s property development businesses, Megaworld Corporation, Inc. acquired AGI’s 49.2% stake in GERI to increase its holdings to 74.96% in May 2014 and made additional various acquisitions in the same year making it the new parent company of GERI.2

GERI together with its subsidiaries have a diversified real estate inventory including residential and commercial lots, residential condominium units, condominium hotel units, and golf club shares. GERI and its subsidiaries are also engaged in the development of residential and office units including urban centers integrating office, residential and commercial components. Below shows the revenue mix of GERI:

The Real Estate segment pertains to the development and sale of residential and office projects. The Rental and Service Income segment includes leasing of office and commercial spaces, and maintenance of golf courses. While the Corporate and Others segment includes marketing services, general and corporate income and expense items.3

The total revenues of GERI were primarily driven by the real estate sales which rose by 6.89% year-on-year to ₱43.741 billion from ₱41.448 billion in 2015. The rental income rose by 75.45% in 2016. Both contributed to the growth of operating profit by 47.97% in 2016 to ₱1.114 billion, excluding the non-recurring gains of ₱82 million and non-operating revenue of ₱254 million.

In the 3rd quarter of 2017, the real estate sales grew by 9.18% from 1st quarter of 2017. The rental income increased by 3.08% from 1st quarter to 3rd quarter of 2017 due to increase in occupancy rate of commercial space.

Corporate Structure

GERI’s corporate structure is presented below: 4

FEUDC is engaged in the operation of hotels in Fairways and Bluewater, a resort complex integrated in Boracay Newcoast. while FEPI and FEGDI had engaged in the development of residential subdivisions, condominium buildings, commercial lots, and golf clubs that are sold thru third party real estate brokers. MGEI is the in-house marketing of GERI that was acquired primarily to market the real estate products of GERI developments. 5

Shareholders6

The Company has a single class of common shares. As of December 31, 2016:

  1. 10,986,000,000 common shares were listed the PSE
  2. GERI has a total of about 4,287 common shareholders

The following are the GERI’s top 5 shareholders as of December 31, 2016:

The table below sets forth each member of the Board and Executive Officers of GERI:

Andrew L. Tan was first elected as Chairman of the Board and Chief Executive Officer on January 12, 2011. He is also the Chairman of the Board of Alliance Global Group, Inc. since 2006 and of Emperador Inc. since August 2013. He is concurrently the Chairman of the Board and President of Megaworld Corporation.

  • He is also the Chairman of Empire East Land Holdings, Inc., Suntrust Properties, Inc. and a director of Travellers International Hotel Group, Inc., Fairways & Bluewater Resort Golf & Country Club, Inc. and Twin Lakes Corporation.
  • He is also a Vice Chairman and Treasurer of Golden Arches Development Corporation.

Lourdes T. Gutierrez-Alfonso was first elected as Director of GERI on June 30, 2011 and was appointed as the Managing Director in a concurrent capacity on March 1, 2015 to oversee the business performance, and lead in the formulation of overall strategic direction and policies for GERI.

  • She is currently the Chief Operating Officer of Megaworld Corporation.
  • She is the Chairman of Megaworld’s property management arm, First Oceanic Property Management, Inc. and Eastwood Cinema 2000, Inc.
  • She is also the Director and Vice Chairman of Suntrust Properties, Inc. and a director of Forbes Town Properties & Holdings, Inc., Megaworld Resort Estates, Inc., Oceantown Properties, Inc., Prestige Hotels & Resorts, Inc. and Lucky Chinatown Cinemas, Inc., Oceanfrot Properties, Inc., Megaworld Global-Estate, Inc., Boracay Newcoast Hotel Group, Inc., Twin Lakes Corporation, and Fil-Estate Urban Dev’t Corp.

Monica T. Salomon was elected as Director and President of GERI on March 1, 2015. Prior to joining GERI, she was Head of Megaworld’s Corporate Management Division and member of Megaworld’s Management Executive Committee, which is responsible for the development and execution of GERI’s corporate strategies, policies and initiatives.

  • She holds directorships in various Megaworld and GERI subsidiaries including Twin Lakes Corporation, Megaworld Global-Estate, Inc., Southwoods Ecocentrum Corp., Southwoods Mall, Inc., Prestige Hotels & Resorts, Inc., Luxury Global Hotels and Leisure, Inc., Oceantown Properties, Inc., Eastwood Property Holdings, Inc., Megaworld Cebu Properties, Inc., and Megaworld Resort Estates Inc.

Atty. Cresencio P. Aquino was elected on February 2018 as Independent Director to serve the unexpired term of Mr. Gerardo C. Garcia and will also sit as a member of the Audit Committee and Corporate Governance Committee. Atty. Aquino has extensive experience in both the public and private sector, and held the following positions: 7

  • Director of Clark Development Corporation from 2012 to 2016
  • Independent Director of Global-Estate Resorts, Inc. from 2010 to 2012
  • Independent Director of Suntrust Home Developers, Inc. from 2009 to 2012
  • Corporate Legal Counsel of MBF Card and One Card Corporation from June 1998 to May 2004

Ms. Lailani V. Villanueva is the Chief Finance Officer and Compliance Officer of GERI. She is a Certified Public Accountant with over 16 years of experience in accounting and finance. She held the following positions in different companies:

  • She was the Senior Accounting Manager from 2007 until 2010 of Megaworld Corporation
  • She is concurrently the Chief Financial Officer of Fairways and Bluewater Resort Golf and Country Club, Inc., and Director and Chief Finance Officer of Southwoods Ecocentrum Corporation.
  • She is also a Director of Boracay Newcoast Federation, Inc., Fil-Estate Golf and Development, Inc., Harbortown Development, Inc., Pioneer L-5 Realty Corp., Sherwood Hills Development, Inc. Sto. Domingo Place Dev. Corp., The Manila Southwoods Carmona Commercial Strip Association, Inc., and Golforce, Inc.

Atty. Dominic V. was elected as the Corporate Secretary and Asst. Corporate Information Officer on January 12, 2011. He is also the Corporate Secretary of Alliance Global Group, Inc., Emperador Inc., Twin Lakes Corporation, Suntrust Properties, Inc. and Eastwood City Estates Association, Inc. He is currently a Vice President with the Corporate Advisory and Compliance Division of Megaworld Corporation.

Family Relationships8

Chairman Andrew L. Tan is the father of director Kevin Andrew L. Tan.

Dividend

No dividend declared since 2014.

Business developments

In December 2017, Megaworld, through GERI, announces its second integrated lifestyle community (ILC) development in Lumban‐Cavinti, Laguna, surrounding Lake Caliraya to be called The Hamptons Caliraya. This 300‐hectare development will be composed of lakeside residential villages and villas, a town center, two 18‐hole golf courses and clubhouse, and a Marina Club that offers water sports activities such as boating, jet ski and kayaking, as well as a shophouse district and resort hotel district. 9 The ₱8 billion projected capital outlays for The Hamptons Caliraya are expected to be disbursed in the next 10 years. 10

Currently, GERI has six (6) integrated leisure and tourism estate developments across the country covering around 2,786 hectares of land presented below: 11

Of these projects, five hotels of GERI located in its townships in Boracay and Alfonso, Batangas near Tagaytay are expected to be completed in 2018 and 2019. Four of these hotels are within Boracay Newcoast, while the other one will be in Twin Lakes. One of its newly opened hotel in 2017 is the Savoy Hotel Boracay, a 6-story hotel that sits on a 1.8-hectare land area with 559 rooms, has 3 dining outlets and a ballroom enough for 120 guests. GERI is spending around ₱10 billion in building the five hotels, which will offer a total of 1,850 rooms including multi-level retail spaces. 12,13

To accelerate the projects in the 1,200-hectare Twin Lakes near Tagaytay, GERI increased the capital expenditures to ₱7 billion from the ₱5 billion capital expenditures that was set for the development of Twin Lakes for 10 years starting 2012. Of this amount, ₱2.5-billion was already spent and the remaining ₱4.5 billion will be spent to speed up the development in the next four years. Megaworld considers the Twin Lakes project as a “long-term, ongoing development” being built in stages from the mountain top downward to the lake shore.

The two towers of the first residential condominium development in Twin Lakes called The Vineyard Residences are set to turn over 151 units by the end of 2017. The third building is scheduled to be ready at the end of 2018 or beginning of 2019. This residential development is composed of three towers with a total of 245 units. Since launch in 2012, prices of units at The Vineyard Residences increased by almost 15%. GERI’s revenues from this residential project reached ₱3.5 billion. In 2016, The Vineyard Residences won the ‘Best Condo Development for Resort’ at the Philippine Property Awards. 14

The 2016 capital-expenditure budget are funded by internally generated funds, including the preselling of residential projects, and from bank loan financing. 15 Megaworld to utilize internally generated funds to finance the capital spending in 2017 and will also tap the debt market through the proceeds of the first tranche of its ₱30 billion retail bond program.16

Key considerations

  • Revenues of GERI were primarily driven by the real estate sales. Real Estate sales increased by 27.22% in the 3rd quarter of 2017 to ₱1,256 million from ₱987 million in the 2nd quarter.
  • There is a change in board composition of GERI on February 2018. Atty. Cresencio P. Aquino was elected as Independent Director to serve the unexpired term of Mr. Gerardo C. Garcia who died last January 2018. 7
  • In December 2017, GERI to shell out ₱8 billion in the next 10 years to develop its second integrated lifestyle community to be called The Hamptons Caliraya.9
  • Capital expenditures for real estate developments are mostly funded by internally generated funds. GERI’s interest-bearing loans are 14.4% and 23.3% of the total liabilities in 2015 and 2016, respectively. Debt-to-equity ratio is at .54 and .61 in 2015 and 2016, respectively.
  • GERI to complete Twin Lakes Hotel and two more hotels from its Boracay Newcoast Hotels until 2019 providing an inventory of 1,850 rooms. 12

Sources:

  1. GERI SEC 17-A 2016, https://goo.gl/syVHnF
  2. GERI SEC 17-A 2016, p. 6 https://goo.gl/syVHnF; Global-Estate Resorts Inc. Business profile http://www.global-estate.ph/HOME/OurCompany/BusinessProfile/index.html
  1. GERI SEC 17-A 2016, p. 92 https://goo.gl/syVHnF
  2. GERI SEC 17-A 2016, p. 17 & 61 https://goo.gl/syVHnF
  3. GERI SEC 17-A 2016, p. 6 https://goo.gl/syVHnF
  4. GERI SEC 17-A 2016, p. 31 https://goo.gl/syVHnF
  5. GERI SEC 4-8 2018 Election of Director, https://goo.gl/9QjroN
  6. GERI SEC 17-A 2016, p. 36 https://goo.gl/syVHnF
  7. Megaworld’s GERI to Develop P8‐B ‘Integrated Lifestyle Community’ in Caliraya, https://goo.gl/frTDPB
  8. GERI earmarks P8B for Caliraya estate, https://goo.gl/hb7A93
  9. GERI SEC 17-A 2016, p. 14 https://goo.gl/syVHnF; GERI SEC 4-31 2017 GERI to Quadruple Rental Income in Three Years, https://goo.gl/cDyFZ9; Megaworld to Open New Mall in Southwoods City, https://goo.gl/yCfShS; Megaworld’s GERI Builds Sta. Barbara Heights into Township, https://goo.gl/WydFSa; GERI Launches Alabang West Project, https://goo.gl/WchwyT; GERI unveils P5B Antipolo project, https://goo.gl/4Bgmed
  1. Megaworld’s Geri Spending P10-B To Complete Five Hotels By 2019, https://goo.gl/C1QYVt
  2. Savoy Hotel Boracay: The Newest Beach Destination, https://goo.gl/6dF1jH
  3. GERI SEC 4-31 2017 Twin Lakes, https://goo.gl/MAqMQR; Megaworld’s Twin Lakes to turn over first condos in 2017, https://goo.gl/DawRwU
  4. GERI SEC 4-13 2016 Clarification of News Reports, https://goo.gl/vkx2ya
  5. Megaworld sets P60B capex for 2017, https://goo.gl/mnYlq5

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