Vista Land may sell two non-core malls for up to P15 billion ahead of $420 million bond maturity
Listed Philippine developer Vista Land & Lifescapes is considering selling two non-core malls for up to P15 billion ($250 million) to refinance a $420-million bond due in July 2027. CreditSights identified asset sales, unpledging financial investments, shareholder support and domestic bank loans as
Listed property developer Vista Land & Lifescapes, Inc. (VLL) may sell two non-core malls for up to P15 billion as it explores funding options ahead of a $420-million bond maturity in July 2027, according to CreditSights.
“VLL has substantial unencumbered good quality retail malls and a land bank that can be monetized. Management indicated to us recently that two non-core malls could be divested to third parties for up to P15 billion ($250 million) in aggregate proceeds and that it is planning to sell commercial units and lots,” CreditSights analysts Jonathan Tan Jun Jie and Lakshmanan R. said in an Aug. 28 report.
CreditSights identified four potential avenues for VLL to refinance the $420-million bond: asset sales, the unpledging and sale of financial investments in dollar-denominated securities, shareholder support, and domestic bank loans. “We broadly view VLL’s onshore debt maturities until end-2027 as largely manageable; bank loans and retail peso bonds in particular are likely to be refinanced by relationship banks and shareholder support respectively,” the analysts said.
Another asset-sale option is the injection of malls into majority-owned VistaREIT, Inc., although VLL plans to wait for mall occupancy rates to improve before pursuing another transaction. The research firm said the option may take more time to materialize and could be more relevant to VLL’s bonds due in 2029 than to the 2027 refinancing.
VLL could also raise funds by unpledging and selling its financial investments in dollar-denominated securities, according to CreditSights. About 85 per cent of these investments, mostly investment-grade corporate bonds, are pledged against bank loans. VLL is considering using alternative collateral, including malls, to replace the pledged securities. “We estimate a full sale of these investments and applying a 20% haircut could raise proceeds of ~PHP 26 bn/~$425 mn,” CreditSights said.
Shareholder support could also come from a potential stake sale in Villar Land. CreditSights estimated that the sale of a 10 per cent stake from majority shareholder Manuel B. Villar, Jr.’s 88.6 per cent holding could raise about $500 million, although it flagged uncertainty over buyer appetite and the potential need for a substantial discount. Another potential source of shareholder support is the P8-billion equity portion from the sale of PrimeWater. The earlier sale of PrimeWater and repayment of its debt also freed up P22 billion in group-wide bank credit limits, which VLL believes it could tap from the same group of relationship banks.
CreditSights said the key risk is VLL’s ability to execute its fundraising plans in time for its debt maturities. It also cited weak financial performance and corporate governance concerns as factors that could affect lending sentiment and asset-sale efforts. Despite these risks, the research firm said the range of available funding options provides a “meaningful cushion” against VLL’s refinancing requirements through the end of 2027.
Shares in Vista Land & Lifescapes have been suspended from trading. The stock last closed at P0.96 apiece on June 1, according to Philippine Stock Exchange data.
