Published on Thursday, 16 August 2012 00:00
ALBERT CASTRO
MALAYA BUSINESS INSIGHT ONLINE

 

Ayala Land, Inc., may have won the 74-hectare Food Terminal, Inc., property in Taguig City; but did so at a high price. Now the largest property developer in the Philippines has to prove naysayers wrong that what it did was a risk.

Valued at an initial price of P10.2 billion, the property forms part of the 103-hectare former Food Manufacturing, Inc., complex in Taguig City.

Ayala Land topped competing bids with its offer of P24.33 billion which is more than double the initial price and dwarfing the nearest bid of P14.666 billion of Robinsons Land Corp.

At a valuation of P32,879 per square meter, Ayala Land’s offer is reminiscent of the successful bid of Metro Pacific Corp. for the privatization of Fort Bonifacio in 1996.

“If you go down history, you will note that (Ayala Land is) not the first developer to put a high premium to a property. Recall that Bonifacio Global City (BGC), was not previously owned by Ayala Land but by Metro Pacific but because they were hit by the crisis, it changed hands,” said Jun Calaycay, a trader at Accord Capital, Inc.

“So the question hanging is, will they also share the same fate, though you can’t fault them now for bidding high. It only shows their keen desire to own that piece of land,” Calaycay said.

The food terminal complex was set up during the Marcos administration in an effort to liven up the agriculture sector.

Strapped for cash, FTI was among the government assets set for privatization.

Jaime E. Ysmael, Ayala Land chief finance officer, said that the property will serve as its “southern gateway” into Metro Manila, the same way that its joint venture Vertis North in Quezon City is its gateway for the northern part of Metro Manila.

“Given the property’s proximity to C5, SLEX, and the Skyway, Ayala Land will transform this property into another business district and bring all its product lines into the development. This will add to the company’s increasing portfolio of business districts, which include Makati, Bonifacio Global City (BGC), Vertis North in Quezon City, and Cebu Park District,” Ysmael said.

“With these two developments, we are now well-positioned to capitalize on the development opportunities of these two growth centers, supplemented by the government’s planned intermodal transport system. Just as we envision Vertis North to be the first transit-oriented CBD in the north, FTI will serve the same purpose for the south,” Ysmael added.

Ysmael also said the property was acquired at a “significant discount” to land values in Makati and BGC, which have continued to appreciate over time, with the company’s thoughtful masterplanning and continuous development.

Maria Arlyssa E. Narciso, analyst at brokerage firm AB Capital Securities, Inc., said that property consultant Colliers has noted that Fort Bonifacio ‘enjoyed the highest growth in land value for the first quarter of the year and expects to grow by 17 percent in a 12-month period.

“Fort Bonifacio, which is near the FTI property, has a current land value of P189,000 per sqm. Ayala Land’s bid valued the 74 hectares at P24.3 billion or about P32,879 per sqm of the FTI property. If using the first quarter per sqm of land, the FTI property would have a value of P139 billion,” said Narciso.

“The potential of this area is gearing highly towards residential and commercial markets since it is located near the business district, airport, and even other commercial establishments. Also, only a few listed developers have projects nearby. Most have projects in Parañaque and Bonifacio Global City but not quite close to this FTI property. This new property will again add to Ayala Land’s landbank for future projects. This area is noteworthy for its strategic location and untapped markets,” she added.

Calaycay said the next question now is how Ayala Land will finance the acquisition. As part of the sale, Ayala Land will have to pay an upfront cash of P19.46 billion within 60 days, with the balance paid within a year.

“That’s the remaining question. But what’s clear is they have the right to develop the property,” said Calaycay.

The remaining parcel of land in FTI will be developed by the government for various purposes, among them a plan to put up a five-hectare integrated bus terminal to be undertaken by the Department of Transportation and Communication and the Department of Public Works and Highways.

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