Biz Buzz: Top 200

From an original “top 40” list of loyal (and, needless to say, moneyed) property buyers who get an exclusive preview whenever Ayala Land Premier (ALP) is bringing a new property project into the market, this elite list called “Premier Circle” has grown to about 200 high net worth individuals.

The Premier Circle is a loyalty program that recognizes and nurtures business relationships, especially with repeat buyers.

Members of this Premier Circle must have had a first crack at placing orders in two of ALP’s latest upscale projects—Two Roxas Triangle in Makati and East Gallery Place—both of which were already 70-percent taken up before the recent public launch.

But ALP head Jose Juan Jugo said even if certain persons in Premier Circle wanted to buy a lot of units in any particular development, limits were set on the amount an individual could acquire to leave room for other buyers. For a developer like ALP, having diverse ownership is good for any of its residential hubs.

In East Gallery, ALI recently sold its single most expensive residential unit (and possibly the priciest condominium unit in the primary market to date), Skyrise 1400, which is a five-bedroom penthouse residence with a 25-meter lap pool and garden deck, and encompasses about 1,400 square meters. The buyer paid P200 million for this premium unit. As they value the privacy of the buyer, ALP officials can’t be coaxed into revealing who the wealthy buyer is.

Meanwhile, a critical mass of offshore property buyers—affluent Filipinos based abroad and foreign investors in search of yields—are boosting sales of upscale residential property in the country. For ALP, “overseas” demand now accounts for 15 to 20 percent of sales, depending on the type of project.–Doris C. Dumlao

Speaking of which…

Several weeks ago, tycoon Lucio Tan was spotted meeting with Jaime Augusto Zobel de Ayala at Fairmont Hotel in Makati City.

At that time, Tan was busy raising money to buy back control of Philippine Airlines from Ramon Ang at San Miguel Corp. People who saw them together naturally assumed that the tobacco and beer magnate was trying to get the Zobels’ financial backing for the pricey reacquisition effort.

Of course, Tan was able to re acquire PAL without the help of strategic equity partners and, instead, relied on loans from a number of banks. The Ayalas were not on board the effort, either on the equity side or the debt side.

So what happened? Did Zobel rebuff Tan? After all, it is known in business circles that the Zobels’ Bank of the Philippine Islands was just a few hours away from signing a deal to acquire Tan’s Philippine National Bank just a couple of years ago before the deal was scuttled by Tan himself.

Lingering bad blood? Apparently not.

Biz Buzz sources revealed that the two wealthy gentlemen were indeed talking business, but that it had nothing to do with PAL. It had nothing to do with banks either. Instead, it was about real estate. Tan’s real estate firm, to be exact.

Our sources tell us that the tycoon has been toying with the idea of selling his flagship property development firm Eton Properties to Makati’s largest landlord, Ayala Land Inc. of the Zobels.

The meeting was exploratory, we hear, and it was unclear whether anything would come out of it. On paper, however, it makes sense. Ayala Land has been aggressive in rolling out projects and building its land bank in recent years.

After an aggressive development spurt, Tan’s Eton seems to have slowed down in undertaking real estate projects, preferring to finish existing condominium developments while putting a hold on new projects (the Eton City township in Santa Rosa, Laguna—designed to have houses built around an artificial lake—has largely stood idle these last few years).

But Eton does have a sizable landbank which is, apparently, very interesting for Ayala Land.

Is a deal imminent? Based on Tan’s observed negotiating style, probably not. But will it happen eventually? For the right price, anything is possible.–Daxim L. Lucas

Second wind

Loyalty is a two-way street in many businesses here—especially the family-owned ones—and it’s no different at Philippine Airlines.

Despite the mounting challenges facing the industry, PAL’s newly appointed general manager, Jaime Bautista, decided to return to the airline so beloved by his boss, taipan Lucio Tan, despite being “retired.”

But why? Bautista, PAL’s former president just before San Miguel Corp.’s two-year stint as manager and shareholder started in 2012, basically said he “cannot say no” to the businessman who has been his boss for more than three decades.

Apparently, Bautista’s time under Tan extended even before the billionaire assumed control of the flag carrier in the mid-1990s. Even after Bautista gave way to San Miguel’s Ramon Ang two years ago, he remained a consultant for “special projects” within Tan’s group.

Still, it’s good to set limits, and Bautista must be thinking about that as well. Asked how long he would stay with the airline, and if five years would be enough, Bautista quipped that might be “too much time.”–Miguel R. Camus

What power crisis?

When energy officials speak about the looming energy crisis in 2015, the most quoted figure is a power shortage of about 800 megawatts, which will supposedly hit the island of Luzon anywhere from late March of next year until sometime in May.

Under this scenario, Luzon-based households and businesses may experience several hours of rotating power outages on any given hot day. This, of course, has prompted calls for the implementation of short-term remedial measures, culminating in the bid to give President Aquino emergency powers to address the impending crisis. But some energy industry insiders believe that the shortage may, in fact, be an artificial one.

The culprit—according to insiders—is the secondary price cap at the Wholesale Electricity Spot Market imposed by the government (the Energy Regulatory Commission, to be exact) earlier this year in the wake of the power price spike fiasco the country experienced in late 2013.

This cap basically imposes a price ceiling on how much power generators will earn from running their power plants that supply electricity-hungry Luzon, where the bulk of the country’s economic activity is located.

The cap also made it unprofitable for diesel-fired power plants to run their turbines to generate electricity. Instead of running at a loss, these diesel plants (which generate expensive electricity because they are old and inefficient) are kept idle by their owners.

“What happened here is that the government intervened in the market and said consumers should only pay this much (equivalent to the price cap) instead of letting consumers decide on consumption themselves,” one industry insider said. “Letting all these diesel plants run at the price they need to be run will reduce this shortage significantly.”

He said the forecasted shortage of 800 MW was artificial (or, artificially large). The real shortage, according to another industry insider, is a more manageable 200-300 MW.–Daxim L. Lucas

E-mail us at [email protected]. Get business alerts and a preview of Biz Buzz the evening before it comes out. Text ON INQ BUSINESS to 4467 (P2.50/alert).