Ayala Land acquires 51% of Tutuban Center owner

PROPERTY giant Ayala Land Inc. has sealed a deal to acquire majority interest in Prime Orion Philippines Inc. (Popi), owner and developer of the popular bazaar hub in Divisoria, Tutuban Center.

A deed of subscription had been executed whereby ALI subscribed to 2.5 billion common shares or 51.06 percent of Popi for P2.25 a share or a total block price of P5.62 billion, both companies disclosed to the Philippine Stock Exchange Friday.

ALI paid for the initial 25 percent of the block or P1.4 billion while the rest will be settled upon fulfillment of certain terms and conditions.

To implement the ALI subscription, Popi said it would file with the Securities and Exchange Commission an application to increase its authorized capital stock from P2.4 billion to P7.5 billion, divided into 7.5 million common shares of stock with a par value of P1.

ALI’s entry in Popi is seen to provide the financial muscle to redevelop Tutuban Center and double its retail space to ride on robust consumer spending in the country.

Based on last year’s estimates, Popi earns about P400 million annually in rental income from Tutuban Center, which has about 60,000 square meters in gross leasable area, offering various concepts from wholesale and bargain stalls to regular retail and food outlets.

Popi expects to unlock more recurring earnings from the doubling of the retail space in the shopping complex. At the same time, it sees room to grow Tutuban Center given that it has so far built only on an eight-hectare portion of the 20-hectare property.

In March last year, the Philippine National Railways (PNR) turned over to Popi’s indirect subsidiary Tutuban Properties Inc. (TPI) about three hectares of leased property along Tayuman St. in June last year, PNR also turned over 5.8 hectares along Dagupan St. The project is expected to be integrated with the North-South railway project of the Department of Transportation and Communications (DOTC) and PNR.

Aside from the Divisoria property, Popi has a beachfront in San Vicente, Palawan. Popi likewise has a 10-percent stake in Cyber Bay Corp., claimant to reimbursement expenses from the government in relation to the aborted 750-hectare development project along Manila Bay.

Formerly known as Guoco Holdings (Philippines) Inc., Popi has interests in real estate and property development, nonlife insurance and other allied services. The company has a market capitalization of about P5.2 billion, less than what ALI has agreed to pay for a 51-percent stake in the company.