VISAYAS-MINDANAO property developer Cebu Landmasters Inc. (CLI) expects to benefit from a possible reduction in borrowing costs this year, which could boost demand for housing units.
"The rate cuts that we are anticipating will help not only in our ability to raise capital, but ... should also improve our margins," CLI Chief Executive Officer Grant Cheng told reporters at the sidelines of a listing ceremony last Friday.
"On the demand side, people buy their homes using a mortgage. A lower interest rate can only help spur more demand for more buyers who want to be homeowners, whether it's upgrading their homes or buying a first home for themselves," he added.
Cheng explained that lower rates made it affordable and feasible to purchase a residential unit from any developer — "much more reachable for many of these aspiring individuals."
The CLI executive, however, said that interest rate cuts would only be possible if domestic inflation, which accelerated further in March to 3.7 percent, slowed in the coming months.
"Inflation always means [a] downside ... If the prices of commodities and raw materials go up as the prices of fuel go up, that's always a risk for us," he added.
"Delivery and shipping costs are always a big part of our input costs, whether it is for cement or any other construction material. That's one of the key risks that we have to look out for and that we have to actively manage."
CLI last Friday raised P4.28 billion in fresh funds via the public offering of Series A preferred shares, issued in two subseries: Series A-1 and Series A-2.
Proceeds from the issuance will fund the company's strategic expansion initiatives and ongoing project developments.
The four-year Series A-1 and the seven-year Series A-2 preferred shares have dividend rates of 7.585 percent and 8.25 percent per annum, respectively.
CLI currently has P27 billion worth of new developments in the pipeline, including expansion projects in several areas, such as Butuan.
It has also allocated P14.5 billion for capital expenditures this year, with a portion of the budget being earmarked for land acquisition efforts for its inaugural Luzon project.
The company's shares were unchanged at P2.93 each last Friday.