Retirement Hub; Investors disagree with SRP rent rate

CEBU, Philippines - The Japanese investors who plan to build a retirement facility at the South Road Properties do not agree to the lease rate of P100 per square meter proposed by the Cebu City government.

I Land Way Philippines Inc. President Kazuhito Matsuda said their proposed rate of P32 is "more favorable" as it is even higher than the lease rates of MEZ1 and MEZ2, which is P28 per square meter a month.

"Our offer is much more favorable than the prevailing rate at equivalent government-owned Special Economic Zones (SEZs) in Cebu. Records indicate that the prevailing lease rate both in MEZ1 and MEZ2 are not more than P28 sqm/month," Matsuda said.

I Land Way Philippines, Inc. and Primary Properties Corp. plan to rent 12,500 square meters at the SRP for a P1.41- billion retirement facility. In their final proposal, the presidents of the two companies set the rental rate at P32 per square meter.

However, the city government's ad hoc committee headed by Councilor Gerardo Carillo together with the executive department proposed a P100 per square meter lease rate, which is higher than the P50 per square meter floor price proposed originally by an appraisal committee.

The leasehold agreement includes the proposed lease period of 50 years and additional 25 years, stressing that the first three years of the lease term is free. The ad hoc committee has earlier proposed free rent for the first five years.

On the sixth year, the rental fee will increase to two percent of P32 per square meter rental fee after every five years until succeeding years of the contract.

If the city government agrees with the proposal, the investors will pay for a six-month lot rental and the remaining balance will be paid as soon as construction of the facility begins. Also, a six-month advance rental will be given to the city government while the rest of the payables will be paid upon the execution of the lease contract.

Matsuda hopes that the agreement will be settled before April 28.

"We reiterate our proposal to build and operate a three-storey retirement facility in Cebu as scheduled. There is a need to expedite the negotiation in order for us to meet our time targets. We are hopeful to reach into an agreement on or before April 28.2014," the Japanese investors said in a letter addressed to the Cebu City Council.

Matsuda pointed out that there were offers from other local government units but they refused the offers because Cebu reportedly "has the best location for the project."

Carillo said the ad hoc committee will study the final proposal of the Japanese investors carefully.

"We will study carefully that (proposal). The rental doesn't really matter because what is important is the commencement of  the project to spur more economic activity in the city," Carillo told The Freeman.

He said the City Council has yet to receive the final proposal from the Japanese investors. Mayor Michael Rama and lawyer Jose Daluz, chairman of  the city's Bids and Awards Committee, have received their copies.

Daluz, for his part, is amenable to the proposal.

"We are fully supporting the proposal of the Japanese investors. "The P32 per square meter, for me, is already high considering that the lot is raw and undeveloped compared to MEZ1 and MEZ2," he said.

The retirement facility, Daluz said, would give Cebu a real economic activity.

"I hope the city will approve this. If  they don't, the facility would never be realized. The City Council should decide firmly in order not to delay any projects that are beneficial to the constituents of the city. Ngil-ad na kaayo atong standing sa mga Japanese tungod sa delay," he said.

Iland Co. Japan has established a sister company in Cebu, I Land Way Philippines Inc., and entered into a consortium with Beta Aquila Primary Corp, a sister company of Primary Properties Corporation, purposely to develop the retirement facility. — (FREEMAN)