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Ayala Land set to acquire Boulevard Holdings assets

Posted on April 26, 2013 07:46:37 PM

REAL ESTATE firm Ayala Land, Inc. is poised to acquire a number of assets held by resort developer Boulevard Holdings, Inc., Ayala Land said in a disclosure on Friday.
"Please be informed that Ayala Land has agreed with Boulevard Holdings to acquire certain landholding assets of the latter. The agreement is subject to obtaining the requisite approvals and compliance with other conditions after the conduct of due diligence and related studies," Ayala Land’s disclosure read.

A separate disclosure by Boulevard Holdings noted that Ayala Land’s upscale property brand, Ayala Land Premier, has expressed "preliminary interest" in some Boulevard Holdings properties.

"We believe Boulevard Holdings has assets that can be aligned with our own growth strategies. The agreement between the two parties [Ayala Land and Boulevard Holdings] is still preliminary and due diligence on these assets still has to be completed before the transaction is finalized," Jorge Miguel T. Marco, Ayala Land corporate communications head, said in a text message on Friday.

The announcement comes as the board of Boulevard Holdings, in a special meeting on Thursday, authorized Jose Marcel E. Panlilio, chairman and chief executive officer, to sign on April 25 the terms of reference, and on or before May 10 a final agreement for the sale of an "operating unit and/or assets of Boulevard Holdings, wholly or in part," Boulevard Holdings said in a second disclosure.

This year, Ayala Land has allotted an estimated P20 billion for land acquisitions to enhance its land bank, which stood at 5,694 hectares as of end-2012.

Boulevard Holdings, meanwhile, is a holding company established in 1994, with primary interests in hotel, resort, and tourism-related developments.

Its operating subsidiaries are Friday’s Holdings, Inc. and Crown One Land, Inc., owners of Friday’s Boracay Beach Resort in Boracay Island, Aklan, as well as Friday’s Puerto Galera, Inc., owner of Friday’s Puerto Galera Beach Resort in Boquete Island, Oriental Mindoro.

Since 2011, Boulevard Holdings has been scouting for foreign and local partners to develop the firm’s 3,000-hectare Puerto Azul resort in Ternate, Cavite.

Proposed plans for Puerto Azul include the construction of an entertainment and retail complex dubbed The Wharf and a 250- to 300-room branded hotel on nearby Paniman beach, as well as the development of 30,000 hillside residences built around resort hotels, 10 large resort hotel sites, and 60 sites for small 20-room bed-and-breakfast units.

CEBU VENTURE
Meanwhile, Ayala Land said in a separate statement on Friday that it has agreed to partner with Cebu-based Vicsal Group of Companies -- the group behind Metro Gaisano department stores and supermarkets -- for the development of a 12-hectare lot in Mactan Island, Cebu in to a "leisure-oriented" mixed-use development with residential, retail, and hotel components.

Ayala Land will assume a 55% stake in the partnership, the statement said.

"This joint venture opens up another opportunity to work with a strong partner such as the Vicsal Group in expanding [our] presence and further creating value in the rapidly-growing and progressive market in Cebu," Antonino T. Aquino, Ayala Land president and chief executive officer, was quoted as saying in the statement.

FUND RAISING
In a related development, Ayala Land is looking at tapping the debt and capital markets in the second semester and raise around P25 billion to partly fund capital expenditures (capex) this year, taking advantage of the robust borrowing environment, a company official said recently.

"In the second half," Jaime E. Ysmael, Ayala Land chief finance officer, said at the sidelines of the annual stockholders’ meeting of Ayala Land’s parent Ayala Corp. in Fairmont Makati, Makati City Friday last week, when asked when the developer will proceed with fund-raising plans to cover its capex this year.

"A combination of bilateral loans for the subsidiaries, and capital market bond issuances for Ayala Land at the parent company level. At least P15 billion for Ayala Land, and maybe another P10 billion for the subsidiaries," Mr. Ysmael said when asked to elaborate.

Ayala Land has earmarked P65.5 billion for capex this year -- P46 billion for project completion and roughly P20 billion for land banking -- to bankroll the construction of 69 property projects valued collectively at P129 billion.

Last January, Mr. Ysmael said that a bulk of Ayala Land’s 2013 capex will be channeled to project development versus land banking, and that the firm may issue bonds for its budget this year. He did not cite details at the time, however.

Last March, Ayala Land had raised roughly P12.2 billion from a share subscription and placement deal with Ayala involving 399.53 million Ayala Land shares sold at P30.50 apiece.

Ayala Land intends to tap the attractive borrowing environment at present, Mr. Ysmael noted.

For instance policy rates -- the benchmark for interest rates -- are at record lows of 3.5% and 5.5% for overnight borrowing and lending, respectively, were maintained following the Monetary Board’s policy meeting on Thursday.

"We intend to lock in the longest possible tenors possible at the lowest possible rates," Mr. Ysmael said.

The stock market, meanwhile, has been posting record high closes since the start of the year. The bellwether Philippine Stock Exchange index last peaked on April 22 when it rose by 163.38 points or 2.35% to close at 7,120.48, its 27th all-time high for the year, on the back of positive investor sentiment on first quarter earnings, and in line with the positive close of most markets in Asia.

Ayala Land was organized in 1988 when its parent, Ayala Corp., spun off its real estate division into an independent subsidiary to allow management focus on real estate.

Shares of Ayala Land gained 20 centavos or 0.65% to P31.20 on Friday from P31.00 on Thursday, while those of Boulevard Holdings rose by P0.024 or 15.48% to P0.179 on Friday from P0.155 on Thursday. -- Franz Jonathan G. de la Fuente

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