PLDT Inc. sold its Smart Tower building in Makati City to DMC Urban Property Developers Inc. of the Consunji family for $128 million, according to real estate services firm JLL.
JLL said in a statement the deal represents the largest commercial real estate transaction completed in the Philippines this year.
PLDT under the terms of the transaction will continue to occupy Smart Tower, which houses the corporate headquarters of its subsidiary Smart over the next five years through a leaseback agreement.
“Investor appetite for Grade A assets in the Metro Manila area has remained high throughout an unpredictable year. The sale of the marquee Smart Tower reinforces the long-term confidence in the office market and the ambitions of corporate occupiers to reimagine their real estate holdings,” JLL Philippines country head Christophe Vicic said.
Smart Tower is a 37-story Grade A office development with gross floor area of 38,000 square meters and 244 parking slots located along Ayala Ave. in Makati, the country’s central business district.
“An asset of this size and prestige is a rarity in the market. In a more telling sign of the evolving maturity of the Philippines real estate sector, we expect the sale and leaseback component of this transaction to prompt corporations to further re-evaluate asset light operating models,” JLL Philippines senior director and head of capital markets P. Ryan Isip said.
PLDT early this year disclosed plan to sell some of its real estate assets to reduce the company’s borrowings for aggressive capital spending initiatives.
The Philippine Competition Commission approved in September the acquisition by DMC Urban Property Developers Inc. of two Smart buildings and their 2,400-square-meter lot in Makati City from PLDT.
DMC-UPDI is a real estate development company established by the Consunji family in 1977. It leases office spaces in Makati and BGC, land in Davao and Antique, and land and improvement in Makati, Taguig and Manila.
DMC-UPDI also has subdivision housing and condominium projects in Davao and Bataan.
The anti-trust body said it approved the transaction after assessments showed it would not affect the competition in the office leasing space in the central business districts of Makati and Bonifacio Global City.
The transaction involves the acquisition of two parcels of land from PLDT aggregating 2,400 square meters by the property developer, along with improvements consisting of two buildings—Smart Tower I and II—along Ayala Ave.
PLDT also owns commercial properties primarily for its own use and use of subsidiaries. Other properties not for its own use are leased to third parties.