Merkado Barkada
September 23, 2024 | 8:24am
Liberty Flour Mills [LFM 13.30 ?6.4%; 446% avgVol] [link] signed a memorandum of agreement to sell eight parcels of land (372,201 sqm) in Rizal province to Haus Talk [HTI 1.10 unch; 37% avgVol] for P1.0 billion. HTI will make five installment payments over the next two years (as the individual parcel sales are completed). For LFM, this sale will provide a one-off gain that gives it “additional liquidity in its operations, expanding its investment portfolio, and diversification into other food related ventures and other related businesses.” For HTI, the deal will expand HTI’s landbank, and the company “envisions” using it as part of the company’s first mixed-use development project that HTI expects to bring in approximately P9 billion in revenue. HTI said that development of the land should begin in Q4/25.
MB BOTTOM-LINE: I’m a huge fan of legitimate market transactions like this between unrelated parties. LFM takes some land that it was sleeping on and sells it at market rates to a developer that specializes in turning raw land into value. HTI gains landbank and builds its reputation as a “value for money” (HTI’s words) buyer of land. Deals like this are rare because the wholesale property market is quite incestuous and private. Most prominent non-developer landowners have some subsidiary in their organization that is tasked with squeezing a few drops of value out of massive landholdings that were acquired in the Old Days for a crate of mangoes. These developments almost never (in my opinion) fully realize the value of the land for shareholders, and instead seem built only to insulate the owners/management team from the heartache of being “beaten” in a deal. I hope that we will see more of these types of deals as the trust in our independent property valuation infrastructure grows and the sophistication of our secondary and ancillary developers improves.
Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.
Be the first to comment