Cebu Landmasters [CLI 2.60 unch; 33% avgVol] [link] disclosed that it has entered into a joint venture (JV) with Martinez Agricultural Corporation (MAC) to “jointly develop properties into a mixed-use project with residential condominiums and a retail component.” Under the agreement, CLI will subscribe to P224 million worth of the JV’s shares and MAC will subscribe to P149M worth, for a 60:40 split in favor of CLI. There was no information on the timeline of the development, its size, or its location.
MB BOTTOM-LINE: Doing real estate development through a JV is one way to spread the financial and market risk of a new project. In some cases, it can even be a smooth way to unlock access to prime pieces of real estate where the owner of the parcel contributes the land and the developer contributes the cash and workforce. Here, though, it seems as though both CLI and MAC are putting cash into the JV, so it’s not clear (yet) the particular set of skills that MAC brings to the table. Perhaps CLI feels as though MAC will be a valuable marketing and sales partner due to its knowledge of the project area. Hard to say.
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