Posted
on November 10, 2015 10:51:00 PM [ BusinessWorld Online ]
By
Krista A. M. Montealegre, Senior Reporter
BILLIONAIRE
and former Senator Manuel B. Villar, Jr. is consolidating his residential and
commercial leasing businesses under Vista Land & Lifescapes, Inc. in a deal
valued at P33 billion, accelerating its transformation into one of the
Philippines’ biggest integrated property developers.
The
country’s largest homebuilder is acquiring 88.25% of Starmalls, Inc. from the
Fine Group, owned by Mr. Villar and his family, both companies said in separate
disclosures to the stock exchange yesterday.
Vista
Land shares rose 1.23% to P5.75 apiece and Starmalls shares lost 4.89% to P7.78
each on Tuesday.
The
acquisition of Starmalls will make Vista Land the country’s top four integrated
property developer after Ayala Land, Inc., SM Prime Holdings, Inc. and
Megaworld Corp., respectively, capitalizing on synergies as it transforms its
Camella housing projects into integrated “communicities,” Vista Land Chief
Executive Officer Manuel Paolo A. Villar said in a briefing yesterday.
‘A
GAME-CHANGER’
“Without
question, that changes the dynamics of Vista Land from a purely residential
developer to now an integrated developer... We not only have a very strong,
best-in-class residential business, [but] we also have a very good mass
market-driven consumer retail platform, which is Starmalls. It’s a game-changer
for Vista Land,” the younger Mr. Villar said.
Vista
Land has identified about 100 areas or over 600 hectares of land from its
existing Camella projects around the country with ready population catchment
areas for potential Starmalls projects.
With
Starmalls adding to Vista Land’s recurring revenue stream, the leasing side of
the business may eventually account for 20% of revenues and earnings before
interest, taxes, depreciation, and amortization (EBITDA), the younger Mr.
Villar said.
Starmalls
owns and operates 10 retail malls in key cities and municipalities, and two
business process outsourcing (BPO) commercial centers in Metro Manila, with a
combined gross floor area of 509,385 square meters. It also has four retail
malls and one BPO commercial center currently under construction.
BENEFICIAL
The integration
will enable Vista Land to achieve higher selling prices, increased sales
velocity and higher retail rental rates from its improved integrated product
offering, as well as lower land acquisition and infrastructure costs, the
younger Mr. Villar said.
With a
strong leasing business, Vista Land can also take on the larger-scale projects
being offered to the company by landowners, the former senator added.
Vista
Land and Starmalls have the widest geographical reach in the real estate
business, with an established presence in 92 cities and municipalities across
35 provinces.
“The
move can also be seen as a way for the business units to effectively diversify
and spread its portfolio across all other segments, ensuring that it is
“well-insulated” from any external shocks to the local property sector,” Claro
dG. Cordero, Jr., head of research and valuation at real estate advisory firm
Jones Lang LaSalle, said in a mobile phone message.
Vista
Land is buying the Starmalls shares at P4.51 each, a 44.87% discount to the
latter’s closing price of P8.18 apiece on Nov. 9. The Fine Group will then
subscribe to approximately 4.6 billion new Vista Land shares at P7.15 per
share, a 25.88% premium to Vista Land’s last traded price of P5.68 per share on
Nov. 9.
As a
result of the transaction, Villar-led Fine Properties, Inc. will hike its stake
in Vista Land to 67.45% from 54%.
A
tender offer will be conducted for the remaining Starmalls shares under the
same terms and conditions. Vista Land may apply for the delisting of Starmalls
from the stock exchange following the completion of the tender offer.
Vista
Land pocketed P1.9 billion in the third quarter, 35% year-on-year from P1.41
billion. This pushed the property firm’s nine-month earnings by 18% to P5
billion from P4.25 billion on higher sales.
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