ALI enters into retailing JV with Tantocos
Mall developer to take direct stake in upscale storesBy Doris C. Dumlao
Philippine Daily Inquirer
MANILA, Philippines—Property giant Ayala Land Inc. (ALI) is making a bigger bet on the Philippine consumer by diversifying into the retail business, in partnership with the Tantoco family, which owns upscale retailer Rustan’s Group.
While ALI has been building shopping malls that are being leased out to retailers, the property giant now wants a direct stake in store operations and has signed a joint venture with the Tantocos’ Specialty Investments Inc. (SII) to “pursue opportunities in the Philippine retail sector.”
“We will explore all aspects of retail, which may include being a landlord or operating a retail business,” ALI chief finance officer Jaime Ysmael said in a text message on Wednesday.
“The partnership with SII will enable ALI to support its mixed-use developments and, at the same time, grow its recurring income portfolio,” ALI deputy compliance officer Pamela Ann Perez told the Philippine Stock Exchange.
SII is a wholly owned subsidiary of the Tantocos’ Stores Specialists Inc. (SSI), one of the largest retail companies in the Philippines, with the exclusive rights to sell, distribute and market in the country a variety of brands from around the world. Based on SSI’s website, it carries over 50 luxury brands and 250 boutique shops occupying over 250,000 square feet of prime retail space.
SSI brings into the country the brands that are being sold in the Rustan’s department stores and stand-alone shops. The Tantocos also operate the Debenhams and Starbucks franchises in the country.
“I think it’s a positive development for ALI considering the expertise of their partner, the Rustan’s Group,” said PNB Securities deputy chief Manny Lisbona. “The move is a natural progression and was likely studied in depth by ALI prior to making this decision.”
“It seems that they would like to have a vertical integration: ALI will be the landlord but at the same time they also own the stores given that they have a lot of upcoming projects, like in San Lazaro and the community projects where they plan to put up new malls,” said Jose Mari Lacson, head of research at local stock brokerage Campos Lanuza & Co.
In an interview, Lacson said it made sense for ALI to have a direct stake in retailing because this would make it easier to fill up the requirements of their retail developments.
Two of the country’s largest conglomerates and shopping mall developers—SM and JG Summit—both own retailing operations that usually become anchor tenants in their projects. The Ayala group, for its part, was previously into retailing (via Ayala Corp.) as an operator of the Burger King franchise in the Philippines but sold out of this business in the early 2000s.
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