Vista Land and Lifescapes Inc. said Tuesday it will pay P33.5 billion to acquire shopping mall and office developer Starmalls Inc. in a bid to become a fully integrated property developer.
Vista Land and Starmalls, both listed in the stock exchange, are controlled by the family of former senator Manuel Villar.
Villar, chairman of Vista Land, said the acquisition would make the company the fourth leading integrated property developer, next to SM Prime Holdings Inc., Ayala Land Inc. and Megaworld Corp.
Vista Land agreed to buy 88.25 percent of Starmalls at P4.51 a share from Villar and his family. That was a 45-percent discount to Starmalls’ price of P8.18 before the announcement. Vista Land will issue 4.57 billion new shares to the Villar group at P7.15 each.
Shares of Vista Land rose 1.2 percent to P5.75 Tuesday, while Starmalls fell 4.9 percent to P7.78. The benchmark Philippine Stock Exchange index was 1 percent lower.
“We believe that the acquisition of Starmalls, with its real malls and BPO 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.
Vista Land said it would 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. Vista Land plans to delist Starmalls after the tender offer period.
Vista Land president Paolo Manuel Villar said he expected the company’s rental income to be a significant contributor to the group’s total sales.
Starmalls owns and operates two BPO commercial centers and 12 shopping malls with total gross floor area of 509,000 square meters. Five malls are currently under construction and are slated to open in 2016.
“This acquisition introduces a recurring revenue source that adds stability to our existing operations,” the younger 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,” Paolo Villar said.
The company president said the group identified 100 areas out of 600 hectares of land under its existing land bank for potential Starmalls’ projects.
Vista Land earlier said it expected to register P1 billion in rental revenues by 2017.
Villar, however, said the acquisition would “destroy” the P1-billion rental revenue target as it expected rental revenues to easily account for 20 percent of the group’s total revenues moving forward.
Vista Land said net income in the first nine months grew 18 percent to P5 billion from P4.2 billion a year ago. Nine-month consolidated revenues also increased 10 percent to P18.5 billion from P16.9 billion in 2014.