Mactan Leisure City project closer to breaking ground as partners announce MOU

In a reply to a query from the Philippine Stock Exchange, Calata said on Monday its partners Sino-America Gaming Investment Group LLC and Macau Resources Group Ltd. target to sign an MOU in “early September 2016” that would create their Philippine unit Macau Leisure City Management Corp.

To be registered as a Lapu-Lapu City-based company, MLCMC will be the main operator of the planned Mactan Leisure City. Lapu-Lapu City is on Mactan Island across the main city of Cebu, capital of the province of Cebu.

Aside from MLCMC, Calata said a real estate investment trust (REIT) “shall be established by September” which will be called Calata Land Inc. This REIT will be 51 percent owned by Calata, 35 percent owned by the Sino Group, and 14 percent owned by Calata president Joseph Calata.

MLCMC and Calata Land “will enter into a lease agreement” within the same month to proceed with the rental arrangements of the Cebu property where Mactan Leisure City will rise.

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This is a usual arrangement in integrated casino developments where international casino operators sign long-term lease deals with local property companies for the establishment of the casino complex

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Earlier, Calata disclosed that it plans to start construction of Mactan Leisure City in January 2017 while it secures permits with Philippine Gaming and Amusement Corp. (Pagcor) and Tourism Infrastructure and Enterprise Zone Authority (Tieza).

Its partners MRG and Sino will initially infuse about P836.1 million for the project including the REIT vehicle, which is expected to be completed by mid-2020.

Calata said the REIT or Calata Land “shall receive a $2 million rent paid twice annually; after a 42 month rent holiday, however, once operational, rent ceiling will rise to 1.5 percent of EBITDA (earnings before interest, tax, depreciation and amortization). Current projections anticipate a $320 million EBITDA.”

This funding for Calata Land will come from a $13-million loan to be ordered by the Sino Group, as well as from the $5 million or P234-million proceeds from the infusion of Sino shares to agribusiness firm Calata.

The transactions are still subject to approval of the Securities and Exchange Commission and the PSE.

Management consulting company RiskWise Global Capital Inc. will handle the business activities and transactions under the Mactan Leisure City venture.

RiskWise also presents business opportunities for Calata as it will introduce Calata to “co-developers from Israel, USA, and Australia to develop agricultural communities and industrial agricultural projects.”