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SM keen to tap Ortigas camp’s vast landholdings

Posted on February 09, 2012 10:08:10 PM [ BusinessWorld Online ]

THE SM Group tagged the vast landholdings of the Ortigas camp as a key interest when it yesterday confirmed takeover talks, which analysts say could result in a profitable synergy of assets and know-how.

“We confirm that SM Group is in the process of discussion for the acquisition of majority interest in [OCLP Holdings, Inc.],”Jose T. Sio, SM Investments Corp. executive vice-president and chief finance officer said in a disclosure, referring to the holding firm behind the 16-hectare Greenhills Shopping Center.

“Ortigas has a large land asset portfolio. If it pushes through, there will definitely be a good synergy for the residential and retail segments,” Corazon P. Guidote, SM Investments senior vice-president for investor relations told BusinessWorld in a telephone interview yesterday.

Details of the acquisition have yet to be finalized, Mr. Sio added.

Ortigas was hit by the 1997 Asian financial crisis, and is currently considering restructuring efforts to attract investors.

Last year, it bared plans to spend roughly P25 billion in 15 years for a 10-hectare, mixed-use development south of the Ortigas business district.

“It is our understanding that some key [company] shareholders are in dialogue and discussion with a prospective buyer...” J. Rowell L. Recinto, OCLP Holdings president and chief executive said in a separate e-mailed statement yesterday.

“But a deal has not been concluded. In the meantime, it is business as usual for the company,” Mr. Recinto added without elaborating.
SM’s planned acquisition is expected to give the Sy-led conglomerate more room to expand, experts said.

“SM can [do] wonders with this developable [sic] land in the medium to long-term, both for sale or lease for recurring income. This merger will make SM a formidable player in the property market moving forward,” Victor J. Asuncion, CB Richard Ellis Philippines, Inc. research and consultancy services executive director, said in an e-mail yesterday.

“Ortigas is a strategic land bank acquisition for SM. At the rate SM is developing its assets, they need the land bank of Ortigas for future development and to sustain revenue growth,” Mr. Asuncion added.

The likely acquisition is also seen to improve the SM group’s bottom line.

“I think [the deal] will boil down to the financials of SM. More available real estate spaces would contribute to the company’s revenue-generating capacity. It’s definitely a plus for SM,” said Freya B. Natividad, analyst at online brokerage in a telephone interview yesterday.

SM Investments has so far hiked its nine-month net income last year to P14.7 billion, 13.6% higher than P12.48 billion in 2010 on the back of robust revenues from its retail and banking businesses.

SM Investments shares shed 0.72% to close P687 apiece yesterday from P692. -- Franz Jonathan G. de la Fuente

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