The board of BDO Unibank Inc. has approved the buyout of the entire equity interests of Keppel Philippines Properties Inc. and Opon-KE Properties Inc. in SM Keppel Land (SMKL) Inc., the operator of the Podium Complex in Ortigas Center.
The acquisition consists of 217.91 million common shares and 36.4 million redeemable preferred shares equivalent to 50 percent of the outstanding capital stock of SMKL at adjusted net asset value at closing.
“By this acquisition, BDO will consolidate its ownership of the Podium Complex, presently 50-percent owned by SMKL, consisting of BDO’s Corporate Center Ortigas, the West Tower and the Podium Mall. The Podium Complex currently houses BDO’s offices in Ortigas and BDO already occupies approximately 63 percent of the office spaces in the Podium Complex,” BDO said in its disclosure to the Philippine Stock Exchange.
SMKL, a joint venture between the lender and listed firm Keppel Philippines Properties Inc., will cease to exist at the close of the deal. Its primary business is to operate the Podium complex in Mandaluyong, which include its retail and office spaces.
In 2021, SMKL reported earnings of P1.15 billion, a turnaround from the P83.8 million loss in the previous year. Gross revenues for 2021 reached P2.1 billion, more than three times from the P673.8 million in 2020.
“This divestment is in line with Keppel’s Vision 2030 asset monetization plans to unlock capital which can be channeled towards new growth opportunities,” Keppel said.
“The consideration was arrived at on a willing-buyer, willing-seller basis, taking into account, among others, the agreed value of the Podium West Tower and the Podium Mall and the net asset value of the sale shares,” it said.
Ratings affirmed
THE announcement of the buy-out came days after Moody’s Investor Service (Moody’s) affirmed the “Baa2” local and foreign deposit rating for BDO on the back of expectations that it will benefit from the country’s pandemic recovery.
“The affirmation of BDO’s ‘Baa2’ deposit and senior unsecured debt ratings reflects the bank’s stabilizing asset quality, strong capital and adequate profitability. Funding will remain a key credit strength, underpinned by its extensive deposit franchise as the largest Philippine bank by deposits,” Moody’s said. “BDO’s asset quality should continue to benefit from the strong post-pandemic economic recovery in the Philippines.”
The ratings agency, however, noted that BDO’s gross non-performing loans (NPL) ratio at the end of 2022 declined to 2 percent from 2.9 percent last year while other asset quality indicators such as “net NPL formation” and “stage-2 loans ratio” improved.
The bank’s problem loan coverage was 138 percent as of the end of 2022, which is at a strong level, Moody’s said. However, it noted that the bank’s credit concentration to large domestic corporates, a structural feature of the Philippine banking system, remains a key asset risk.
The credit watcher also expects the bank’s profitability to remain stable over the next 12-18 months, driven by a stable net interest margin.
