[Republished] DSA’s two-part investigative series into Philippines’ Revolution Precrafted

Robbie Antonio, Founder, Revolution Precrafted

Editor’s note: Robbie Antonio, the founder of the luxury prefab construction firm Revolution Precrafted, is being probed by the National Bureau of Investigation (NBI) in the Philippines for allegedly duping suppliers and contractors. Meanwhile, DealStreetAsia has received a notice, dated Feb. 1, from Lambert Worldwide, representing Antonio, to take down our investigative articles into the company.

We are republishing the two articles, published on Feb. 21, 2020 and March 2, 2020, as free reads below.

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Slow projects, small fundraising dim Revolution Precrafted’s unicorn halo

Manila-based Revolution Precrafted had what seemed like the trappings of a poster-boy startup a charismatic founder, celebrity endorsements and the hallowed status of being the Philippines’ first unicorn.

But five years from inception, the company has yet to deliver on its promise of quick-to-build luxury homes in its home market, at least not at a rate that befits its towering valuation. Existing and external investors have also been hesitant to invest in the company during an unusually tiny fundraising round for what is supposed to be a billion-dollar business.

A unicorn’s tiny fundraising

Revolution burst onto the scene in 2015 with its grand vision of ultra-sleek and modern modular house designs, all of which would be prefabricated (prefab) homes designed by award-winning architects such as the late Zaha Hadid, Daniel Libeskind and Philip Johnson.

Its chief executive and founder was Robbie Antonio, a photogenic and eloquent man who hung out with Hollywood stars and hails from the family behind Philippines-listed Century Properties Group, Inc. Antonio told the South China Morning Post in 2018 that he wanted Revolution to be the “Ikea of homes,” creating residences that can be built in 60 to 90 days, instead of two years.

It was a dream that Antonio successfully pitched to investors. In October 2017, K2 Global, a Singapore-based venture capital firm, invested an undisclosed sum in the company, catapulting Revolution to stardom as the first tech unicorn out of the Philippines. (Disclosure: K2 Global was earlier an investor in DealStreetAsia. The VC firm exited this investment by selling its shares to Nikkei in April 2019.)

The halo did not last long. Sometime between 2017 and 2018, Revolution was back on the fundraising trail, approaching Southeast Asian venture capital (VC) firms such as Qiming Ventures and Openspace Ventures for funds.

In September 2018, Antonio told the audience at DealStreetAsia’s Asia PE-VC Summit that Revolution was considering raising $100 million in its Series C round the following year.

“We will probably do a Series C next year when we have thousands of homes installed and reach more market than where we are right now. That’s obviously part of the gameplan,” Antonio had said, hinting at the possibility of the firm hitting a $10-billion valuation mark in three to four years.

According to an email exchange seen by DealStreetAsia, Antonio was seeking as little as $1 million to $3 million at a $1.85 billion valuation for his business in 2017.

It is extremely rare for billion-dollar businesses to raise such small amounts given their presumed scale. At that investment size, a full equity deal of that nature would either give an investor a minuscule stake of just thousandths of a per cent in Revolution or imply that Antonio was taking a drastic haircut on the value of his own shares.

A prominent Indonesia-based VC said the firm did not respond to a fundraising pitch from Revolution in 2018 as unicorns would not be raising capital as low as $1 million. 

“I can create a $1 company and ask someone to invest another $1 in my company and give him 0.00000000001% of shares. Hence I can be a billionaire on paper,” explained a partner at this VC firm.

Qiming Ventures and Openspace Ventures are understood to have rejected the offer. Both declined to comment or verify those figures. 

K2 Global, which gave Revolution its unicorn status, is also understood to have declined to reinvest. According to an industry source, the VC firm had committed to a follow-on investment in 2018-19, but did not do so as it had ‘no visibility on the company.’

Revolution could not comment on the deal in time for publication.

One source close to Revolution’s past fundraising efforts told DealStreetAsia that Antonio retains significant control over the company. Its other shareholders include 500 Startups, which joined its $15.4 million Series A in early 2017, and Filipino angels such as Xurpas co-founder and business tycoon Nix Nolledo.

The source added that Revolution’s valuation was based on multiples of future sales on the contracts signed rather than previously delivered projects. That explained the rapid rise of Revolution’s valuations, which spiked with every contract that Antonio signed.

Revolution was understood to already be valued at $128 million during its seed round with early investors. This doubled to $256 million during its Series A, joined by 500 Startups in early 2017. When K2 Global joined in October 2017, the unicorn’s horn was already showing.

While K2 had valued Revolution based on its order book, its investment is learnt to have come with full ratchet downside protection, which meant that if Revolution were to raise a “down” round in the future, K2 would receive additional shares in the company.

It is not unusual for investors to base valuations on future revenue projections during a startup’s early years. But showing proof of execution is crucial if the startup needs to successfully raise more capital further down the line.

Unfinished business

In March 2017, Revolution was reported by Tech in Asia to have booked $110 million in orders. After a flurry of deal announcements in 2018 in international markets ranging from the Middle East to the Caribbean, the company said it had bagged contracts worth over $7 billion.

In a 2018 interview with CNBC, Antonio said that he was only getting warmed up. “I’ve told my team I want to be in 25 different countries this year, 55 by next year, 85 in 2020 and possibly go public then.”

We reached out to several companies the Filipino firm announced deals with across the world, including Seven Tide in Dubai (a $3.2 billion deal for The World Islands), the KT Group in Myanmar (the $1.2 billion Okkyin project), Bahrain’s Property One Investment Company (a multi-million-dollar deal to supply residential villas) and BC Estudio in Spain (project to build 50 hotel villas in Catalonia).

None of the companies we reached out to responded to our queries on project status.

In its home market at least, Revolution does not appear to be building homes at the pace that Antonio was pushing for. Industry observers shared with DealStreetAsia that orders for its Philippine units have not been brisk. These include Flavorscapes at Lakeshore, in Pampanga province; Revolution Hills in Rizal province; and Batulao Artscapes in Batangas, which is being developed with Century Properties.

When DealStreetAsia visited the Philippine projects, the sites looked incomplete and unoccupied. This seemed to be at odds with Antonio’s comments about erecting prefabricated homes in months rather than years.

At Flavorscapes Lakeshore, a $750 million project that officially broke ground more than a year ago in November 2018, there seemed to be little progress made on construction. We managed to visit the site despite being redirected a couple of times first by a security guard at the showrooms to a homeowners’ association, then by the association to the sales team, which did not pick up the phone.

The 140-hectare site was originally envisioned to be a sprawling complex of residential and commercial buildings, with the beautiful lake of Lakeshore Pampanga as the central focus of community activity. Flavorscapes was to be the world’s first livable food park, with roughly 14,000 homes to be built onsite.

Instead, we found rows of derelict, bare-faced modular structures and not a single construction worker in sight. People on site told us that Central Country Estate (CCEI), the developer of the project, recently stopped sending sand and gravel to location.

Banners revealed plans for three types of units, named Nest, Alcove and Spaces. Only Nest units seemed to have been built so far.

Rows of barefaced buildings at Revolution Flavorscapes. Source: DealStreetAsia.

 

There were 39 units out of a projected total of 379 Nest homes scheduled for completion. A close inspection inside one of the homes showed gaps in the structure.

There were gaps in the building, including between the intersection between two walls as seen above. Source: DealStreetAsia.

A former Revolution employee told DealStreetAsia that technology and cost limitations made it difficult to reach the prefab ideals that Antonio had been pitching.

“Robbie has always sold the image of prefab as something that can be easily assembled, like the ‘Simple’ home designed by Jean Nouvel. The assembly was completed in Paris in 48 hours,” the former employee said. “Those luxury pre-fab homes can be done, but not at Robbie’s price point.”

Not quite as planned

It is unclear if progress has been affected by slow construction, or possibly weak sales delaying project starts.

Former suppliers and employees told DealStreetAsia that Revolution was aggressive in driving down its costs by haggling. One supplier griped that payment was withheld on the premise of failing to deliver on time. Revolution would also try to barter by paying in kind in the form of homes, rather than in cash.

As a result, Revolution’s practices made it difficult for the company to maintain long relationships with suppliers and contractors. The sources added that it also affected the ability to uphold quality in the homes.

There are also questions about Antonio’s priorities. In May 2019, Antonio became the CEO and founder of Resident Holdings, which he describes in his Linkedin profile as the parent company of Revolution Precrafted and a host of other businesses including fintech, fashion and beauty retailing and medical and accounting services.

A presentation deck seen by DealStreetAsia showed that Resident Holdings has been pitching itself as an international dealer for a total of 26 Resident brands, including Revolution Precrafted, which remains its flagship product.

Whether Revolution is still the main focus, or whether it is now part of a new project, is unclear. DealStreetAsia has yet to receive responses from Revolution and Antonio on this matter.

Mars Mosqueda and Andi Haswidi contributed to this story.


Below is the second part of DealStreetAsia’s reporting into Revolution Precrafted originally published on March 2, 2020.

Revolution Precrafted’s business deals, customer goodwill hit by struggle to deliver

Revolution Precrafted, the Philippines’ first tech unicorn, is under pressure for its slow progress and aggressive marketing as deals with top global architects fizzle away and angry customers gather on social media.

At least two “starchitects” told DealStreetAsia that they have stopped working with Revolution, which obtained its billion-dollar valuation on promises of building quick-turnaround luxury prefabricated homes. On Facebook, irate customers have gathered to share tales of frustration around the slow progress of their homes and what they perceive to be a lack of transparency from the company.

Revolution’s ambiguous answers to DealStreetAsia’s queries on its sales for Batulao Artscapes is throwing the authenticity of its bold claims even further into question.

Nebulous star deals

Revolution wasn’t just promising prefab homes in record time; those homes would also be designed by an international who’s who list of acclaimed architects such as the late Zaha Hadid, Daniel Libeskind and Philip Johnson. 

A check by DealStreetAsia revealed that while these starchitect partnerships did exist in the past, some of those relationships have since ceased to be.

Libeskind, known for designing Berlin’s Jewish Museum and the World Trade Centre site in Lower Manhattan, told DealStreetAsia over email that he is no longer working with Revolution. Jean Nouvel, a Pritzker Prize-winning architect who commissioned the “Simple” house from Revolution in 2016 to display at the International Contemporary Art Fair in Paris, said the same.

When asked, Revolution said that its contracts with the two architects had “expired.”

“Nonetheless, the company worked with these artists, hence, they are still part of the company’s portfolio,” a company spokesperson said.

Revolution took Libeskind’s ReCreation Pavilion off of its website some time in the evening of Thursday, Feb 27, after receiving our queries. However, the pavilion continues to be listed on Revolution’s Lazada page as a project available for commission. Libeskind did not respond to our queries on why this was so.

Revolution Precrafted took off Daniel Libeskind’s ReCreation Pavilion sometime in the evening of Thursday, Feb 27 after receiving our queries. Source: Revolution Precrafted’s website
Daniel Libeskind’s ReCreation Pavilion on Revolution Precrafted’s Lazada page. Source: Lazada

Apart from Nouvel and Libeskind, DealStreetAsia reached out to 10 other starchitects listed on Revolution’s website, including Zaha Hadid Architects, Christian de Portzamparc, Pelli Clarke and Philip Johnson Alan Ritchie Architects. None responded by press time.

Confusing numbers

Revolution Precrafted may have also stretched the truth about sales.

In a 2019 Revolution sales deck seen by DealStreetAsia, the company said it had collected revenue on the sale of 415 units from January 2018 to March 2019 for its Batulao Artscapes project. Artscapes is jointly developed with Century Properties Group, a publicly listed property developer controlled by Revolution founder Robbie Antonio’s family.

However, Revolution and Century told us in separate email statements that just 249 out of a total 493 Artscapes units were sold as of the end of December 2019, not 415 units. Century even added that these 249 units comprised a sale value of about 1.37 billion Philippine pesos ($26.9 million).

To explain the discrepancy, Century Properties responded by saying that “Revolution may have different parameters from Century for booking sales.” Revolution, on the other hand, told DealStreetAsia to approach Batulao Artscapes. It did not explain what it meant by that.

It is also uncertain how much of the Artscapes project will involve Revolution Precrafted. According to Century Properties, less than a tenth of the entire Batulao Artscapes has been awarded to Revolution.

“Of the total 365,000 square meters (36.5ha) in Batulao Artscapes, Century has awarded 34,000 square meters or only 9.3 per cent to Revolution Precrafted,” Century Properties told DealStreetAsia. “About 157,274 square meters (15.7ha) will be under a different contractor while the balance is for future development.”

Century Properties did not say which contractor will be handling the 15.7ha part of the project.

Whatever the sales and whoever the contractor may be, the clock is ticking on the largely incomplete Batulao Artscapes.

When DealStreetAsia visited the site, the most complete units on the unfinished site were four showrooms, each designed by a different world-class architect. While two of the show units were fully furnished and open to the public, the other two were “already sold” and therefore not open for viewing, an on-site salesperson told us.

In separate statements to DealStreetAsia, the two companies said 124 Artscapes units were currently “on-progress” with an average completion of 67 per cent as of Jan 31, 2020. Another 68 units are underway. All those units are under the “Village 1” phase of development.

This would suggest that construction has yet to begin for the other 300 units planned for Village 1, even though the Artscapes project was launched more than two years ago in December 2017.

Both companies also said that the road network in Artscapes is 97 per cent complete with a second-quarter 2020 projection for completion. Amenities are expected to be completed in the third quarter of 2020.

 

Hedera House by Kenneth Conbonpue. Source: DealStreetAsia

Customer dissatisfaction

Unhappy property buyers have begun taking their complaints about Revolution Precrafted to Facebook. One group focused on Revolution’s Flavorscapes project includes 681 members and hundreds of bitter comments.

Andrea (not her real identity), a Filipino buyer in her late-20s, told DealStreetAsia that she started paying the monthly amortisation for her downpayment in January 2019, after her agent promised that her home would be delivered by December in the same year. 

That did not happen.

A trip to Lakeshore to check on the property found little sign of development except for model houses, she said.

“The model houses were very disappointing because they didn’t look like the ones we saw in the pictures that Revolution Precrafted presented. The model houses looked low-cost and the quality is questionable,” Andrea said.

When she sent an email to Revolution asking about its role in the Lakeshore Flavorscapes project, she was surprised to learn that Central Country Estate, Inc (CCEI) was the developer, not Revolution. 

 

 

Revolution’s reply to Andrea reads: “CCEI is the developer so it is their responsibility when it comes to the project construction. We answer questions on home designs, payments, reservations etc.”

In January 2020, Andrea requested a cancellation and refund but has yet to receive a response from Revolution. To date, she has paid about 99,000 Philippine pesos ($2,000) in monthly instalments and is not hopeful about receiving her refund.

Nathali Rosil faced a similar experience. A Filipino postgraduate student in Canada, Rosil decided to buy a Cocoon unit in 2018 when Century Properties marketed Lakeshore Flavorscapes in Toronto.

When Rosil visited Pampanga in May 2019, she found the site largely undeveloped and farther from the highway than she had expected. The model house she saw did not resemble marketing photos.

To make things worse, Rosil received a notice from Revolution claiming that she had missed several months of payments, even though she said she had been diligently paying her monthly amortisation for over a year.

Facebook group page of Lakeshore buyers showing Cocoon and Nest models. Source: Facebook

Deciding that she had had enough, Rosil asked for a refund in November 2019, but was told that the request is still pending a review by Revolution. 

Rosil pointed out that while it was Century Properties that marketed Lakeshore Flavorscapes in Canada, Century disappeared from the picture after she began wiring funds for her house. Revolution took charge of fund collection, which struck her as an opaque arrangement. 

Revolution, meanwhile, asserts that construction at Flavorscapes is in “full swing,” with its 93 of its homes in “varying stages of development and completion.”

“At present, site development for our Nest and Cocoon homes is at 50 percent. Around 50 units of Nest Home are being constructed in Blocks 1, 2, 3, 4, 5 with most units at 60 percent completion,” a Revolution Precrafted spokesperson added.

Revolution Precrafted and CCEI, its partner developer for Flavorscapes, are also keeping rather ambitious targets for project delivery. Both are eyeing an initial turnover meaning that property buyers will be allowed to possess 50 Nest and 42 Cocoon units sometime in June-July 2020.

When asked about customer complaints, Revolution said, “All real estate projects receive complaints due to a number of factors which include changes in the financial capability of buyers.”

It did say that Revolution Precrafted has sold a total of 4,000 Flavorscapes units since its launch in February 2018.

On February 28, Revolution published in Philippine media what it said was a response to media reports on its projects. In a lengthy statement carried in the Philippine Daily Inquirer, it said:

“The participation of Revolution Precrafted is limited to being the supplier of homes. We maintain an asset light business model which allows us to partner with any developer landowners, or fabricator.

We originally offered prefabricated homes, pavilions and related structures designed by global and local architects, designers and artists. However, as early as 2018, we have announced that we are expanding our product portfolio to include traditional structures in order to increase our customer base.”

The company also sought to place responsibility for the progress of its projects on its business partners.

“As the developers, Century Properties and CCEI are responsible for the land and site developments of the projects. Only after being paid by the developers will Revolution Precrafted and its partner contractors build the homes. Construction of homes is anchored on timely payment of clients,” it said.

Andi Haswidi contributed to this story.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.