July 02, 2015

ALI-SMPH consortium, FLI win bids for Cebu SRP lots

The consortium formed by SM Prime Holdings Inc (SMPH) and Ayala Land Inc (ALI) with its affiliate Cebu Holdings Inc (CHI) jointly won the bid for a 26-hectare lot in Cebu South Road Properties (SRP) for P10.09b or roughly P38,000/sqm. The consortium was the lone bidder for this lot. Meanwhile, Filinvest Land Inc (FLI) also submitted the highest bid for two lots with a combined size of 19.2 hectares. Its winning bid of P6.758b (or P35,128/sqm) topped the P4.21b (P21,888/sqm) offer made by JG Summit Holdings(JGS).

The Cebu City government has set a floor price of P20,000/sqm for the lots that were auctioned. Based on reported bid terms, the winning bidders can build on 65% of the properties with the remaining balance to be set aside for roads and open spaces. They can also developed 30% of the usable land for residential purposes and the remaining balance for commercial development.

Our take: The SRP consists of around 300-hectares of reclaimed land and is considered a new frontier in Cebu. It is envisioned to become a new and modern CBD. FLI has acquired a 10.6-hectare beachfront lot in the SRP in 2009 for around P15,000/sqm and entered in a jv with the Cebu City government to develop another 40 hectares.

It has launched residential projects on a portion of the property covered by the jv while it has recently opened a leisure and resort project developed on a portion of the lot it has acquired. In 2010, SMPH acquired a 30-hectare lot on which it is building the ~472,000-sqm SM Seaside lifestyle mall in the SRP as well as other residential and commercial components to complement its mall project.

The higher bids for the recently auctioned lot should bode well for both SMPH and FLI given the resulting boost to their land valuations and potential selling prices of future projects. – WealthSec