Mall in the middle: Cast of the SM Aura soap
MANILA, Philippines - The battle for prime real estate in the crowded but profitable domain of Metro Manila is at the core of an ongoing dispute among and between parties in business and government.
At stake is an over 3.3-hectare property in Taguig City adjacent to a main thoroughfare and the bustling Bonifacio Global City business and residential center. On it now stands SM Aura, the 47th mall of the Sy-led SM Prime Holdings Inc, with office towers, a chapel, a convention center, and a mini-coliseum.
The dispute has clouded SM's big splash for the project, with no less than global fashion icon Sarah Jessica Parker gracing the opening last May 16. A YouTube video showing the altercation between state-run Bases Conversion Development Authority (BCDA) president Arnel Casanova, who was with armed men, and SM Prime's contractor regarding an access road to the mall also made the social media rounds.
BCDA alleges that building a mall on government land violates the law while SM Prime countered that they are only a lessee in a deal it has clinched with the local government of Taguig.
The legal drama on whether the building is illegal or not has BCDA and allegedly the Ayalas on one side, and SM Prime and the Taguig City local government on the other.
The SM Aura issue is not the first time these entities are in dispute.
BCDA and Ayalas
The Ayalas were dragged into the picture since they have a stake in the decisions regarding Bonifacio Global City at the Fort, which is touted as a development arena that will rival or complement nearby Makati business center.
Ayala Land chair Fernando Zobel de Ayala sits as the vice chair of Fort Bonifacio Development Corp (FBDC), which oversees the master planning of the Bonifacio Global City. The FBDC chair is Joselito D. Campos Jr whose family is Ayala's partner in Evergreen Holdings.
BCDA, Ayala Land Inc, and Evergreen Holdings of the Campos family have a joint agreement inked in 2003 to facilitate the conversion of the 240-hectare Fort Bonifacio, a former military base, into a mixed use urban development.
Ayala Land president Antonino Aquino and BCDA's Casanova also sit in the FBDC board. An FBDC unit, the Bonifacio Estate Services Corporation's (BESC), is in charge of development control, which mandates it to issue work permits for building construction.
The Ayalas and Sys
The two business groups are among the biggest and most profitable in the country. Both are into real estate development, retail, banking, and other capital-intensive businesses.
Ayala Corp. is the country's oldest conglomerate, but the SM Group's SM Investment Corp is in the running as the country's most valuable.
Before the Ayalas and Sys became competitors in land banking, they were partners first. The Sys were among the first to locate in the Ayala-controlled Makati Commercial Center by opening shoe store outlets in 1963. SM Makati became the group's 2nd full-fledged department store in the 1970's, strategically located next to main transportation hub in Makati, a development center which the Ayalas still consider their crown jewel.
Decades after, and as Metro Manila became an even smaller place, the Ayalas and Sys found themselves pitted against each other in land banking and even non-real estate-related projects. Here are a few:
- Ortigas Joint Venture. The Ayalas and the Sys are still locked in a corporate battle to get a strategic Joint Venture partnership with Ortigas & Co Limited Partnership Holdings Inc. (OHI), the massive Manila landlord. The Ortigas family is reportedly in a feud with OHI shareholders divided into 2 factions. One led by Rafael Ortigas and allied with SM Investments, and the other led by Ignacio Ortigas and allied with Ayala Land. Whoever will bag this partnership will have a strong leverage in land banking and real estate expansion.
- Food Terminal Inc. Both groups were among those who vied for the 74-hectare FTI property that the government had put on the auction bloc. The Sys eventually backed out, while the Ayalas won with its P24.331 billion bid. A portion of FTI has been reserved for a 5-hectare integrated bus terminal.
- Bacolod deal. This involved a 7.7-hectare property in Talisay City where the Capitol Civic Center that the local government had wanted to develop stands. Reports stated that while Ayala Land won the project after facing off with the SM Group, a complaint from SM prompted Ayala Land to focus its efforts elsewhere. Both Ayala and SM groups have existing retail, commercial, office or residential developments in the provincial capital of Bacolod City, about 7.3 kilometers away from the contested property in Talisay.
- Cebu-Mactan Airport. Both are among the 7 groups that are bidding for the expansion project at the country's 2nd busiest international airport. Sy unit Premier Airport Group has partnered with Zurich Airport International AG, while AAA Airport Partners, the joint venture of Ayala Land and Aboitiz Equity Ventures, has partnered with ADC & HAS Airports Inc.
- Central Terminal. Before the Department of Transportation and Communication (DOTC) under the leadership of Mar Roxas shelved the project, the naming rights for the Central terminal was given to SM. Reports stated that SM Prime Holdings, Inc., the operator of SM malls, gave the Light Rail Transit Authority P200 million for "naming rights" over the project. Ayala wanted the terminal to be placed in between Trinoma and SM North Edsa but SM won. The project aimed to link the Metro Rail Transit Line 3 (MRT-3), Light Rail Transit Line 1 (LRT-1) and the planned MRT-7.
The Sys and BCDA
The SM Aura Premier issue is not the first legal case between the BCDA and SM group.
In February, the Armed Forces of the Philippines (AFP) and the Department of National Defense (DND) had to intervene in the case between BCDA and SM Land Inc. regarding the privatization of the 33.1-hectare Bonifacio South Pointe project in Taguig City.
The military's intervention came after Casanova said SM Land's Temporary Restraining Order (TRO) against the project has deprived the AFP of crucial funds for its modernization program.
In 2012, the BCDA rejected SM Land's unsolicited offer of P38,500 per sqm and decided to open the development for competitive bidding. Casanova claims that SM Land's offer was significantly lower than the market price in the area. The nearby McKinley property is said to be valued at P80,000 per sqm. to P100,000 sqm.
Taguig City government
The local government of Taguig figures right smack in the middle of the dispute since it was the entity that forged a long-term lease with SM Prime.
Both involved Taguig City's two political clans — the Tingas and Cayetanos. The BCDA turned over the land in dispute to the Tingas, who controlled the city for about a decade until Mayor Laarni Cayetano, the wife of Sen. Alan Peter Cayetano, took over in 2010.
When SM Aura was opened to the public on May 16, Mayor Cayetano had just won a second term after beating Rica Tinga, the sister of Rep. Freddie Tinga, in the mayoral race. Violence marred the May 2013 local campaign, with around 12 people hurt.
The Bonifacio Global City has helped Taguig City shed its "poor image" to become one of the richest cities in the Philippines.
In 2009, data from the National Statistical Coordination Board showed that Taguig earned P2.93 billion, making it the 10th richest city in the country. That same year, Taguig earned P215.83 million from economic enterprises located in its vicinity, the 3rd highest nationwide.
The twists and turns of the SM Aura drama will keep customers, governance watchers, and investors tuned in. - Rappler.com