You have probably heard by now that Ayala Land, Inc. (PSE:ALI) won the bid for the FTI Property in Taguig. The company's bid of P 24.33 billion more than doubled the floor price set by the government, prompting analysts to say that the deal was overbid. Two other companies vied for the land, Robinsons Land Corp and Empire East offered P 14.66 and P 11.248 billion respectively.
ALI no doubt could have saved a ton of money, but it also shows that they have a big plan for the property and high expectations on projected returns. FTI is one of the largest complexes in Metro Manila with an estimated area of 103 hectares. While the land has existing lease contracts, a major portion of the it expires by the end of 2013, giving ALI just enough time to plan on how to develop the land.
To fund the acquisition, Ayala Land has approved the issuance of P 3 billion-bond. Adding the previous reports that ALI has cash on hand worth 17 billion, this will be enough to cover the upfront payment of P 19.5 billion that comes with the bid offer.
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| ALI 1 year stocks chart |
ALI is clearly a worthy investment for the long term. It's stock performance continue to remain strong even if its trading at 40.72 PE. The company has never failed to issue dividends since 2005 and its reputation in developing land like The Global City in Taguig can be considered one of the best in the country. This latest acquisition should be viewed as ALI's willingness to search for more opportunities, a valuable quality to remain on top.
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Disclaimer: This article is solely the opinion of the blogger based on personal research. Any statement made is not a conclusion of absolute fact and is not intended to impose or persuade anyone's judgement.