UCPB to get rid of P5.5-billion idle assets via joint venture

United Coconut Planters Bank (UCPB) will jointly develop P5.5 billion worth of foreclosed assets with five real estate companies, Vice-President Christine Y. Carandang said last week. In an interview, Ms. Carandang, who heads UCPB’s asset management and disposition division, said the idle assets represented 25% of the bank’s P20-billion real and other properties owned or acquired (ROPOA). "We feel that we will recover a better amount [by developing the properties]... If you just sell it in that condition, it will not fetch a good price because it can either be landlocked or there is no right of way," she told BusinessWorld. "It is better for the bank to enter into an agreement with an experienced developer," she added. The 201,873-square meter property along Maharlika Highway leading to Batangas and Quezon will be developed by Filinvest Land, Inc. as a middle to upper-middle income residential project. Called Ashton Fields, it will be developed in four phases, with each residential phase offering both lots and house and lot packages. About 1.4 hectares will be allotted to mixed-use retail and commercial development. Meanwhile, Brittany Corp. will develop the 858,141-square meter Portofino Heights in Muntinlupa along Daang Hari to cater to upper-middle to high-end consumers. It will form part of the expansion of Portofino, which is Brittany’s best-selling master planned community. Sta. Lucia Realty and Development, Inc. will work on the 122,546-square meter Ridgewood Heights in Tagaytay as a mixed-use middle-income development with residential areas and a commercial strip along the national road. UCPB owns 80,787 square meters of property. Century Park Properties, Inc. will transform UCPB’s 1,223-square meter property along De la Costa St. in Makati into Grand Soho Makati, a 40-storey condominium for the mid-income market. Meanwhile, Tagaytay Grassland Co., Inc. will develop the 262,115-square meter property in Nasugbu, Batangas into a mixed-use beach-front recreational and entertainment complex. Ms. Carandang said UCPB is bent on cleaning its loan portfolio. While the bank had sold P11 billion worth of bad loans to a special purpose vehicle (SPV) in the past two years, it has failed to unload its foreclosed assets due to pricing issues. She said most of the projects would cater to the mid-income market. "Overseas contract worker sales are very strong for us, not only on the joint venture side. Our property auctions attract a lot of them. If that is sustained, I think preselling will be quite strong," she added. Ms. Carandang said banks get better pricing under joint ventures but take more risks since they have to wait for the developer to build the property. "f you notice, our developers have a good reputation of finishing their projects. In terms of development risk, that is well contained but we cannot speak for market risk," she said. "However, all indications are improving. Overseas Filipino workers can afford high-end [real estate] because of their purchasing power," she added. Banks’ foreclosed assets are expected to go down to P150 billion this year and P120 billion in 2007 as financial institutions are given more time to unload idle assets through asset management firms. The policy-making Monetary Board has approved the guidelines for joint ventures between banks and real estate development companies, CLSA Asia-Pacific Markets said in a recent report. Alfred Dy, research head of stock brokerage CLSA Philippines, expects more joint ventures between banks and property companies in the coming quarters. He expects bad loans of the banking sector to soften further to P130 billion this year and P85 billion next year. UCPB is one of the biggest beneficiaries of the law extending the SPV law. -RUBY ANNE M. RUBIO/BusinessWorld