Vista Land to acquire Starmalls for P33.5B

MANILA, Philippines – Vista Land and Lifescapes Incorporated will acquire shopping mall and office developer Starmalls Incorporated for P33.5 billion ($710.56 million).

Vista Land and Starmalls are both principally owned by the Villar group. The homebuilder is acquiring 88.25% of Starmalls from the Fine Group, owned by Villar and his family, both companies said in separate disclosures to the stock exchange.

Vista Land chairman Manuel B. Villar said on Tuesday, November 10, that the acquisition will make the company the fourth leading integrated property developer in the country, alongside SM Prime Holdings Incorporated, Ayala Land Incorporated, and Megaworld Corporation.

The acquisition will also hasten the company’s rollout of its investment projects and will enable it to forge joint venture partnerships with other real estate developers.

“We believe that the acquisition of Starmalls, with its real malls and BPO (business process outsourcing) commercial centers, is transformative for Vista Land and represents a major step to realizing our vision of becoming a top integrated real estate developer,” Villar said.

Significant contributor

Vista Land president Paolo Manuel Villar also expects the company's rental income to be a significant contributor to the group's total sales following this transaction.

At present, Starmalls owns two BPO commercial centers and 12 shopping malls with a total gross floor area of 509,000 square meters. Five malls are currently under construction and are slated to open in 2016. (READ: Anticipating huge demand, Manny Villar to build more malls)

“This acquisition introduces a recurring revenue source that adds stability to our existing operations,” Villar said.

“As we integrate both platforms, the complementary nature of residential and commercial developments will enable us to achieve higher selling prices, increased sale velocity, and higher rental rates from our integrated product offering as well as lower land acquisition and infrastructure costs,” he added.

Villar said the company has identified 100 areas out of 600 hectares of land under its existing land bank for potential Starmalls projects.

Vista Land earlier targeted to hit P1 billion ($21.21 million) in rental revenues by 2017.

The acquisition, though, will “destroy” the P1-billion rental revenue target as it expects rental revenues to easily account for 20% of the group’s total revenues, moving forward.

Vista Land said it will conduct a tender offer to acquire the remaining shares in Starmalls as prescribed under the mandatory tender offer rules of the Securities and Exchange Commission. It intends to delist Starmalls after the tender offer period.

Net income rises

Vista Land also reported that its net income for the first 9 months of the year rose 18% to P5 billion ($106.03 million) from P4.2 billion ($89.06 million) recorded in the same period a year ago.

Nine-month consolidated revenues also increased by 10% to P18.5 billion ($392.30 million) versus P16.9 billion ($358.37 million) in 2014.

Share price of Vista Land on November 11 closed at P5.75 ($0.12) per share, up 1.2%. Share price of Starmalls closed at P7.78 ($0.16) apiece, down 4.9%. – Rappler.com