Alphaland: BSP made ‘fantastic investment’

Manuel Q. Bondad assailed the Boy Scouts/Alphaland joint venture as a “raw deal” for the Boy Scouts of the Philippines (BSP) (“Alphaland’s windfall from BSP, speculative,” Opinion, 2/3/15).

1. The joint venture is one of the best, if not the best, deal that BSP ever made. Simply stated, in 2008, BSP owned 60 percent of a one-hectare property on Malugay Street and Ayala Avenue Extension. Sime Darby owned the other 40 percent. The property was valued by independent appraisers at P1 billion. Sime Darby agreed to sell its stake to Alphaland for P400 million, reflecting the value of the property.

Subsequently, BSP and Alphaland entered into a joint venture, in which BSP contributed its land worth P600 million and Alphaland its P400-million land value. In addition, Alphaland committed to fund the entire cost of development, on 85:15 sharing ratio.

Why 15 percent? The total project cost at that time, including the cost of land, was projected at P5 billion. Thus, BSP’s stake of P600 million was equivalent to 12 percent of the total project. After protracted negotiations, Alphaland agreed to increase BSP’s stake to 15 percent. This stake, contrary to Bondad’s allegation, has not decreased despite the fact that the project cost has now ballooned to more than P8 billion.

2. Now called Alphaland Makati Place, the project is valued today at over P21 billion, as follows:

1. a) Five stories of underground parking which can hold a total of 1,000 cars; BSP’s share of 15 percent would be equivalent to 150 parking slots, today being sold by Alphaland at more than P1 million per slot.

1. b) The six-story Podium, which consists of an upscale shopping mall and the universally acclaimed City Club, has a total area of 35,921 square meters. BSP has already opted for one floor (the third floor) of the Podium, whose total area is 6,161 sqm (more than 15 percent). Appraised at P200,000 per sqm, this floor has a total value of P1.23 billion. Alphaland has been renting 1,268.32 sqm of this floor at P500 per sqm per month, which means an income of P634,160 a month for BSP.

2. c) The three towers of residential condominium units, one of the most desired and fast-selling condo units in Makati, have a total of 61,000 sqm with an average selling price of P200,000 per sqm. Some 40 percent of the units have already been sold; the rest will be sold out upon their completion this year. Their total sales value is P12.2 billion; 15 percent of that is P1.83 billion.

Summing up, BSP’s share in the three components of the project (at current value of more than P21 billion) is more than P3 billion, an investment return five times their original contribution of P600 million, or a rate of return of 26 percent per annum. Undoubtedly, a truly fantastic investment!

3. Under the agreement, it is BSP’s prerogative when and in what form they would like to get their 15 percent. As of today, it has decided to take 15 percent of the Podium area only.

4. We cannot speak for BSP, but we surmise it is waiting for the project to be completed before deciding on how its 15-percent share should be delivered. Alphaland will stand by its commitment and will deliver BSP’s share in cash or in kind, as BSP would wish.

—RODOLFO MA. A. PONFERRADA, corporate secretary, Alphaland Corp.