ALI in talks over ‘Plastic City’ dev’t deal

Ayala Land Inc. is in talks with the Gatchalian group for a potential investment in the latter’s 60-hectare “Plastic City” estate in Valenzuela City.

The Gatchalian group hopes to redevelop the sprawling northern Metro Manila estate into a mixed-use urban complex.

According to industry sources, two publicly listed companies controlled by the Gatchalians may be involved in this prospective deal with the Ayalas—Wellex Industries Inc. (WIN) and Philippine Estates Corp. (PHES).

WIN owns Plastics City while PHES is a property development arm of the Gatchalians.

“We are in preliminary talks with a few companies and developers. Ayala Land is just one of them,” the Gatchalian group said. It stressed that nothing has been finalized yet.

Ayala Land also said there was nothing official yet but indicated that talks were ongoing.

“Given the expansion efforts, ALI has been in talks with various groups for potential land acquisition,” a spokesperson from ALI said.

WIN is now trading near its 52-week high of P0.28. Yesterday, its share price dipped by 1.2 percent to P0.24 at closing.

PHES, on the other hand, was among the day’s top gainers when its share price surged by 18.45 percent to P0.199 per share.

Plastic City Industrial Corp. (PCIC), a subsidiary of WIN, has long ceased its plastic manufacturing and commercial operations due to losses.

PCIC subsidiaries decided to lease out its warehouse and building facilities in the estate.

While the Ayalas are in search for new areas of growth, the Gatchalians are trying to unlock the value of its huge estate in Valenzuela City, hoping      to build a commercial and residential complex on its property.

The development plan includes an educational complex envisioned to be something like a small version of the UP technohub in Quezon City.

The proposed redevelopment plan includes the construction of office space to attract business process outsourcing companies. The group is banking on expectations that more BPO locators will move away from the main central business districts.

Under the proposed plan, a new hospital may be put up to serve residents of Valenzuela City.

Also, townhouses and condominium units for different market segments may also be put up in the residential portion of the estate.

Manny Cruz of AsiaSec Equities said the Ayala group held a massive war chest that it would like to deploy, as suggested by its entry into the toll road business after winning the bidding for the Daang Hari tollway project.

In particular, Cruz said, ALI is trying to secure the few remaining large parcels of land within the metropolis or its outskirts.

“This could be in line with its foray into low- to middle-end market, where developers see a large backlog in demand. Most property developers are scaling down their exposure to high-end residential development in expectation of a glut within the next two to three years. They are shifting towards mixed-use development which is easier to sell,” Cruz said.

Valenzuela is an industrial city and serves as the northern gateway to Metro Manila, having two major highways traversing through it— MacArthur Highway and the North Luzon Expressway.

In 2011, the World Bank and the International Finance Corp. ranked Valenzuela City among the “Most Business Friendly” cities in the Philippines. It ranked 4th highest in the “ease of starting a business” and first in the ease of registering property.

PHES of the Gatchalian group developed Pearl of the Orient Tower in Manila, MetroTech Industrial Park and Pacific Grand Residences, both in  Valenzuela City, and Pacific Grand Villas and Pacific Grand Townhomes in Cebu.