Philippines Baguio Condominium Feasibility Study Modified

7/27/2019 Philippines Baguio Condominium Feasibility Study Modified

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BAGUIO CONDOMINIUM FEASIBILITY STUDY (Feb 2007) Note: You are not allow to print or copy any portion of this document without permission from Author.This Document has been thoroughly modified to protect identity of Client and serves only as a referencefor readers. Please contact Business Planners for additional info/inqueries: [email protected]

FEASIBILITY STUDY

ST. PETERS CONDOMINIUMBakakeng Road, Baguio C ity

February 2007

Business PlannersMakati City, PhilippinesEmail: [email protected] Number: 09 28-716.7777

WebSite: www.businessplanners-phil.com


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Key Highlights 1

I. Background of the Study 2

II. Market Highlights 3a. Population Growth 3b. Primary Economy 4c. Educational Institutions 4d. Baguio Property Prices 5e. Emerging Market Trends 6

III. Technical Aspect 7

a. The Property 7b. Location Map 7c. Building Facilities and Features 8d. Lease Contrac t with Tenant 9e. Additional Income by 2 nd year 9e. Nec essary Building Improvements 10

Implementation Schedule 11

IV. Financial Aspect 12

a. Highlights of Financ ials 12b. Findings and Assessment 13

LIST OF OFFICERS 15

FINANCIAL PROJ ECTIONS Table 1. 1 st Year Projected Income Statement Table 2. 1 st Year Projec ted Cash Flow / Position Table 3. Projected Income Statement (Year 1 to 5) Table 4. Projected C ash Flow/Position (Year 1 to 5) Table 5. Fixed Assets and Depreciation Schedules (Year 1 to 5) Table 6. Building Improvement Cost Details /Schedules Table 7. Loan Amortization Schedule Table 8. Assumptions

ATTACHMENTS

OUTLINE OF REPORT


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St. Peters House Condominium, Inc. 1

KEY HIGHLIGHTS

Property Name : ST. PETERS CONDOMINIUMBakakeng, Rd., Baguio C ity

Description : A four storey Commercial Residential Condominiumcurrently being exclusively leased by a Korean-ownCorporation operating a Tutorial School.

Total Lot Area : 400 square meters

Total Floor Area : 1,100.50 square meters

CurrentBuilding Income : Php 180,000 per month

(Income from Leasing Operations)Projected Additional

Rent Income : Php 80,000(Income from Leasing Operations of 4 th Floor start at 2 nd Year)

Estimated LandMarket Value : Php 1.8 Million

Estimated BuildingsBook Value : Php 15 Million

Property Owner : St. Peter House Condominium, Inc.

Representatives : Engr. Edwin Lagadi, PresidentMr. Apolonio Landicho, Building Administrator

Loan Details

Loan Amount : Php 5 Million

Purpose of Loan : Improvement of Building Facilities andAc quisition of New Equipment

Duration : Four (4) Years to Pay

Contact Person : Mr. Apolonio Landicho


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I. Background of the Study

In year 2006, a four-storey condominium was purposely built by Engr. Edwin Lagadi aptly named as St. Peters Condominium. It is now and owned and operated by St.Peter House C ondominium, Inc., under the direc torship of Engr. Edwin Lagadi asPresident and Mr. Apolonio Landicho

The building was initially gea red as a residential condominium to provide lodgingaccommodation for the growing number of transient market, as well as travelers inBaguio C ity.

Being in a highly commercial and easily ac cessible loc ation, the property has been eyedby numerous businessmen and entrepreneurs on the possibility of exclusively leasing thewhole building from the owners.

However, it was only last December 2006 that the owners decided to pursue leasecontract negotiations with a Korean Company for the establishment of a KoreanLanguage Tutorial School/Center. After much deliberation, a 5-year Lease C ontrac t wasforged and signed between the said companies that shall commence on February 2007.

A major portion Building is currently leased by FIL-KOR INTERCULTURAL ENGLISH CENTER,under the ownership of Mr. Sang Gook Park at a lease amount of Php 180,000 per month.

The lease contrac t is for the basement, 1 st floor up to the 4 th floor, excluding the 4 th floorsmain residence and guest house. That specific portion will be leased as a separateresidential condominium unit with a d ifferent lea se contrac t. It is estimated that the MainResidence and guesthouse shall be leased out by the 2 nd year of operations at an

amount of Php 80,000 per month - this would pose as additional revenue for the Building.

In order to ensure a long-term healthy business relationship with the c urrent lessee, theManagement of St. Peters Condominium have initiated a move to further enhance thebuildings features, upgrade utility systems, and improve the overall appearance of theBuilding. Based on initial assessment by contractors, the proceedings would require acapitalization of Php 5 Million.

Thus, to make possible all these building-improvement activities, the total amount will beloaned from a highly reputable banking institution MetroBank.

The loan on the otherhand, will be considered as a Collateralized Loan, with theBuilding used a s collateral. To wit, the Buildings estimated conservative market valuewas computed a t Php 15 Million.


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II. MARKET HIGHLIGHTS

Economic Highlights

A. Population Growth

Population growth rate decreased to 2.31 percent

The C ity of Baguio registered a total population of 252,386 persons in the year2000 up from 226,883 in 1995, giving the city an average annual growth rate of 2.31 percent, a dec rease of 1.79 percentage points from the 1990 to 1995 period

The number of households rose to 52,302, higher by 4,231 households comparedto the 1995 figure. This gave an average household size of 4.8 persons, a slightincrease from 1995 (4.6) and lower thanthe national average of five persons.

Baguio City ranked second in CAR

Baguio C ity ranked second in terms of population size compared to the sixprovinces (Abra, Apayao, Benguet,Ifugao, Kalinga, Mountain Province), inCAR. This city contributed 18.5 percentto the 1.4 million population of theregion.

At the nationa l level, Baguio C ity shared0.33 percent to the Philippine populationof 76.5 million as rec orded in the C ensus2000.

POPULATION GROWTH OF KOREAN NATIONALS IN BAGUIO

In Baguio, the influx of Korean nationals has caught some attention. According tothe Nationa l Bureau of Immigration, Baguio now is host to almost 10,000 Koreans.

It has been reported that most of Korean stay for two months during theirvac ation from school in Korea. Afterwhich, a huge number would start to study

full-time in Baguio universities.


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B. PRIMARY ECONOMY

The primary economy of Baguio City is its educ ational centers of which it has inexcess of seven colleges and universities as well as a plethora of trade andtechnical schools. Estimates are that these schools compose in excess of one

hundred thousand students.

The secondary source of income for the residents is its charac ter as thecommercial hub in the province of Benguet. Many of the agricultural and mininggoods produc ed in Benguet goes to Baguio City for central distribution.

C. EDUCATION

Baguio is a university town. It is considered as the center of education in theentire north Luzon. There are eight institutions of higher education in Baguio City,two of which are ranked as being among the c ountry's top ten.

Saint Louis University, Baguio CityUniversity of BaguioUniversity of the Philippines BaguioUniversity of the Cordilleras (formerly the Baguio Colleges Foundation)Baguio Central UniversityPines City CollegesPhilippine Military Academy

KOREAN ACADAMIES

Korean English academies have proliferated all throughout the city (there areabout 30 "registered" ones with an average of 50 students each, excluding

Koreans charging their countrymen for "homestay" [board and lodging whilestudying in the universities]) the prices of rea l estate renta ls has been driven uppretty high. To be able to house so many students because it is a lucrativebusiness on their part, they have resorted, not only to rent the large, elegantvacation homes, but to renting all the small hotels and inns around the city aswell.


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III. TECHNICAL ASPECT

A. THE PROPERTY

St. Peters Condominium is a four-storey structure loc ated along Bakakeng Road., BaguioCity. Though initially conceptualized to be c ommercial-residential condominium, a newopportunity has been realized and that the whole property/building is now currentlybeing leased by one business entity.

The building has been leased by a Korean Company providing Tutorial/TechnicalCourses for Korean Students residing in Baguio City.

Property Name : St. Peters CondominiumBusiness Address : Purok 9, Barangay Bakakeng, Baguio City

Year Built : 2006Owned by : St. Peter House Condominium, Inc.

Total Lot Area : 400 square meters

TCT No. 83163 - 200.00 sq.m. TCT No. 83162 - 200.00 sq.m.

Total Floor Area : 1,100.50 square meters

Parking : 207.50 sq.m.1st Floor : 207.50 sq.m.2nd Floor : 207.50 sq.m.3rd Floor : 207.50 sq.m.4th Floor : 207.50 sq.m.Attic/RD : 63.00 sq.m.

B. LOCATION MAP


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C. BUILDING FACILITIES AND FEATURES

FLOOR EXISTING FEATURES DESCRIPTION

Basement Eight (8) Parking Slots

Generator Area (Ground Floor)Guard HouseAdministration Office

Plain cement flooring, CHB walls, columns, beams, and

ceilings are painted cement finish.

Administration office and Guard House in selected12x12 ceramic floor finish, walls and ceiling paintedcement finish.

GroundFloor

(a) Main Residence/ReceptionArea,

KitchenDirty KitchenLaundry AreaCommon Toilet and Bath

(b) Three (3) Typical ApartmentUnits, each unit with the following:

Living AreaDining Area

Two (2) Room/ Quarters Toilet and BathLaundry Area

Analok sliding main door, panel type service door,Kitchen Counter and Preparation Tab le of granite slabfinish. Overhead c ab inets and under the countercab inets. Toilet and ba th in selec ted ceramic floor andwall tiles with shower and water heater.

Laundry area and dirty kitchen in selected 16x16ceramic floor tiles and assorted pebble wash-out floorfinish with tubular steel trellis and polycarbonate finish

Each unit has a total floor area of 65 sq.m. Rooms inselec ted floor finish, pa inted stucc o cement finish, withPanel-type main door.

SecondFloor

(a) Main Residence/ReceptionArea,

KitchenDirty KitchenLaundry AreaCommon Toilet and Bath

(b) Three (3) Typical ApartmentUnits, each unit with the following:

Living AreaDining Area

Two (2) Room/ Quarters Toilet and BathLaundry Area

Same specifications as above.

ThirdFloor

(a) Main Residence/Ma stersBedroom

Balcony Toilet and Bath

(b) Dormitory-Type facilityLobby/Receiving AreaLobby with

Toilet/Washroom5 bedrooms/quartersCommon KitchenCommon Toilet and BathLaundry Area

Selected 16x16 ceramic floor finish with 4 baseboard,pa inted plain plaster cement wall finish.

Toilet and Bath for Main Residence has J ac uzzi withbubble batch and shower with sliding enclosure.

Dormitory has built-in closets, TV c ounter with cabinets,kitchen overhead, with computer tables.


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F. NECESSARY BUILDING IMPROVEMENT

The Management of St. Peters Condominium has opted to initiate building improvementactivities that would improve faade and facilities of the property. Said ac tivity aims toachieve the following:

a. Ensure a healthy business relationship with the present tenant, where thefacility can be rendered more appealing and can be perceived as well-equipped for the tenants present needs as a business entity.

b. Maintain buildings aesthetic and functional features vis--vis addingamenities, improving facilities, as well as enhancing building faade. In sodoing, the building can preserve its overall Market Value andcompetitiveness amongst other condominium properties within thevicinity/area.

Building improvements shall require a total amount of Php 5 Million.

Building Activities/New Acquisitions Estimated Cost(in Php)a Equipment for Apa rtment Units 941,400b Fixtures for Multi-Purpose Hall 578,000c Fixtures for Library/Computer Area 671,500d Fac ilities & Equipment for Gym 42,500e Multi-function Telephone System 100,000f Fully Automated Fire Safety System 250,000g General Pest Control 150,000h Stand-by Generator Set 500,000I Water Tanks 60,000

j CCTV Surveillance C amera 270,000k Miscellaneous/Contingenc y 186,600l Final Settlement to Contrac tor 560,000

TOTAL (in Php) 4,310,000

Round-off 5,000,000


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Implementation Schedule (Building Improvement Activities)

The items indicated above would require an estimated timeframe of six (6) weeks tofinish based on overlapping schedules. However, the activities and/ or ac quiring theabove-listed equipment can only commence upon availability of funds and/or releaseof a Loan from a banking institution or a credit facility.

Projected Timetable of Activities is presented below:

IMPLEMENTATION SCHEDULEWk 1 Wk 2 Wk 3 Wk 4 Wk 5 Wk 6

a Equipment for Apartment Unitsb Fixtures for Multi-Purpose Hallc Fixtures for Library/C omputer Aread Facilities & Equipment for Gym

e Multi-function Telephone Systemf Fully Automated Fire Safety Systemg General Pest Controlh Stand-by G enerator Seti Water Tanks

j CCTV Surveillance Camerak Miscellaneous/Contingencyl Final Settlement to Contrac tor


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IV. FINANCIAL ASPECT

A. HIGHLIGHTS OF FINANCIALS

Projec t : St. Peters CondominiumBakakeng Road, Baguio C ity

Year Built : 2006

Estimated BuildingsBook Value : Php 15 Million

Construction Cost : Php 25 Million(Refer to Contrac tors Bill of Materials for details)

Estimated LandMarket Value : Php 1.8 Million

(400 sq.m. X Php 4,500)

Project Gross Income : Php 180,000 per month

Additional IncomeBy 2 nd Yea r : Php 80,000 per month

(Additional income from lease operations of 4 th floor by 2 nd year)

Loan Amount : Php 5 Million

Purpose : Improvement of Building Facilities andAc quisition of New Equipment

Years to Pay : 4 Years

Estimated MonthlyAmortization : Php 131,669

Estimated TotalInterest Payment : Php 957,160


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FINANCIAL PROJ ECTIONS

Tab le 1. 1 st Year Projec ted Income Statement

Tab le 2. 1 st Year Projected Cash Flow/ Position Tab le 3. Projected Income Statement (Year 1 to 5) Tab le 4. Projected C ash Flow / Position (Year 1 to 5) Tab le 5. Fixed Assets and Deprec iation Schedules (Year 1 to 5) Tab le 6. Building Improvement Cost Details /Schedules Tab le 7. Loan Amortization Schedule Tab le 8. Assumptions

AATTTTAACC HHMMEENNTTSS

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Philippines Baguio Condominium Feasibility Study Modified