Mass housing developer 8990 Holdings Inc. sold P5 billion worth of receivables to Dearborne Resources and Holdings Inc., a local financial holding company.
8990 Holdings said in a disclosure to the stock exchange the purchase price was based on the outstanding principal balance of the receivables. The sale of receivables is on a non-recourse basis. China Banking Corp. funded the transaction.
8990 Holdings has sold P15 billion worth of receivables in the past two years and liquidated P10 billion worth of contract-to-sell receivables (CTS).
CTS is the company’s in-house financing program for potential homebuyers.
8990 has been accelerating the sale of receivables at it focuses on funding several projects through internally generated cash and lessening its reliance on debt.
The company’s receivables portfolio as of the end of September 2019 stood at P20.9 billion. This is expected to decline following the sale of P5 billion worth of CTS receivables and upon the completion of the company’s P2.5-billion securitization deal by the end of 2019.
The company has earmarked P4 billion in capital expenditures this year to fund various projects nationwide.
It plans to double capital expenditure to P8 billion next year to support its goal of hitting P20 billion in revenues by the end of next year. Its largest project, Urban Deca Homes Ortigas, will start contributing to 8990’s top line.
8990 Holdings in the first nine months of the year reported a 23-percent increase in net income to P4.2 billion from P3.4 billion year-on-year. Revenues jumped 22 percent to P10.5 billion from P8.6 billion a year ago.
“Our results this quarter and for the year demonstrate the strong demand for housing. But, more importantly, it underlines the importance of not only building houses but developing new communities like what we accomplished at Urban Deca Homes Manila,” said 8990 Holdings acting president and chief executive Alexander Ace Sotto.
He said the company’s current land bank of 626 hectares—equivalent to a projected P154 billion in eventual sales—is expected to help further accelerate the company’s growth in the next years.