The Cebu Provincial Government is getting a better deal out of its so-called Ciudad Property by restructuring its lease rates and sales percentage share in a joint venture project with Filinvest Land Inc. (FLI).
Gov. Gwen Garcia and FLI president and CEO Tristan Las Marias signed an agreement that basically amended a build-transfer-operate (BTO) deal first signed between the Capitol and Fifth Avenue Property Development Corp. in 2006 during Gov. Gwen’s first term in office.
The 2006 BTO, which was later amended in 2015 during the incumbency of then governor and now Vice Gov. Hilario Davide III, covered the development of two contiguous parcels of land owned by the Province situated along Banilad Road in Cebu City, with an aggregate area of 28,564 square meters.
FLI is the successor-in-interest of Fifth Avenue in the joint venture. It means FLI is the one who succeeds to the interest of the Fifth Avenue by operation of law.
Under the original deal, Fifth Avenue shall develop the property. Upon completion, its ownership will be transferred to the Province of Cebu, which then shall grant the firm the right to operate the property for a certain period, allowing it to recoup its investments.
In this manner, the Province is able to add to its assets without selling its property, as well as make improvements on it without spending a centavo for the development.
The Province likewise collects a monthly rental of P35.55 per sq m. per month, and receives sales percentage share of 0.55% to 2% of gross sales, or P200,000 per month, whichever is higher.
However, with the signed amendments today, January 30, at the Governor’s Office, the Capitol will now collect from FLI rental rate of P65 per square meter per month, with an escalation rate of 5% per year, a substantial increase from the 2006 BTO deal.
Sales percentage share has also been amended to 2% of gross sales or P200,000, whichever is higher.
“The parties recognize that several years have lapsed since the execution of the 2006 BTO and the rates of lease indicated therein, which have been carried over without modification in the 2015 BTO, no longer align with current value of property to the prejudice of the Province,” portion of the agreement reads.
Moreover, the amended agreement also reduces the land area of the property from 28,564 sq m. to 14,282 sq m. in order to give way to an improved land use of the joint venture area, whether by FLI or another private proponent after competitive challenge.
In December 2023, FLI submitted an unsolicited proposal for another joint venture with the Province for the development of half of the Ciudad Property into high-end, mixed-use condominium projects. The proposal said it will be an upgrade to the 2006 BTO agreement by providing an increased revenue potential for the Province and the Property, compared to lease of office spaces contemplated under the BTO agreement.
“This partnership is one amongst the many business contracts and business partnerships we have with the Province. Probably a testament to the mutual successes that the Province and Filinvest enjoyed with each other,” Las Marias told Sugbo News.
Aside from the Ciudad Property, the Capitol and FLI also have a joint venture project involving the four-tower BPO Complex called Filinvest Cyberzone Cebu. it is located at a 1.2-hectare Capitol-owned property inside the commercial district of the Cebu IT Park, and is likewise covered by a BTO deal. | IPA
