Ayala Land, Inc.
...growing residential demand

ALI to accelerate capex spending in 2018

AYALA LAND, Inc. (ALI) sees capital expenditure (capex)  accelerating up to P100 billion in 2018, as the property giant aims to keep up with the growing demand for residential projects in the country.

ALI Chief Finance Officer Augusto Cesar D. Bengzon said given the current pace of project developments, spending in 2018 should be larger than its P88-billion capex this year.“Historically we’ve not reached P100 billion. It’s possible. We’re finalizing our budgets. So we’ll see if we see that the opportunities are there,” Mr. Bengzon told reporters after the listing ceremony of its P3.1-billion short-dated notes at Philippine Dealing and Exchange Corp. on Thursday.

Of this projected capex, the bulk will still be allotted for its residential segment, which continues to be the top contributor to revenues.

As of end-September, 49% of this year’s capex was allocated for residential projects, followed by commercial leasing projects at 28%, land acquisitions, new businesses, and other investments taking up 17%, and the development of ALI’s estates accounting for 6%.

Mr. Bengzon noted capital spending increased, alongside the growth of the Philippine economy, which expanded by 6.9% year-on-year in the third quarter of 2017.

“We also have to be thankful for the general economy, 6.9% is quite strong. As you know, our business is closely tied with the economic growth of the country,” he said.

To fund this capex, Mr. Bengzon said the company may issue bonds to raise between P15 billion to P20 billion.

The ALI executive said the company is on track to launch P90 billion worth of residential projects this year. Including its office, commercial, and hospitality segments, ALI will be ending this year with P120 billion in project launches.

“Next year, we’ll see if the economy continues to be as strong as it is. And if demand is there, we will keep up,” Mr. Bengzon said. On Thursday, ALI listed P3.1 billion in short-dated notes at the fixed-income bourse, the proceeds of which will be used to finance its short term debt.

“So essentially we have 30-, 60-, 90-day promissory notes. So with this instrument we’re now extending the tenor to 15 months. The first short-dated note we issued in July was 21 months. This one is a 15-month instrument,” Mr. Bengzon explained.

Last July, ALI also issued P4.3-billion short-dated notes for debt refinancing. This year, the company had a total of P7.4 billion in capital market issues.

Asked whether the company is on track to hit an 18% year on year growth in earnings, Mr. Bengzon said they are “within striking distance.”

The ALI executive added there is usually an uptick in residential sales in the fourth quarter, due to the demand from overseas Filipino workers coming home for the holidays.

For the first nine months of 2017, ALI profits rose 18% to P17.8 billion, on the back of a 16% growth in revenues to P98.9 billion. The company attributed the increase to higher property sales for the period, which climbed to P94.2 billion, 12% higher year on year.

With this performance, Mr. Bengzon said the company remains on track to meet its 2020 vision, which aims to grow net income to as high as P40 billion by 2020.

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Ayala Land mulls options for health care business

AYALA LAND, Inc. (ALI) is studying options on how to move forward with its hospital business, following reports it is selling its health care brand QualiMed.

“I think we’re currently studying the options,” ALI Chief Finance Officer Augusto Cesar D. Bengzon told reporters in Makati last week when asked if they plan to unload the hospital business.

The QualiMed brand is ALI’s partnership with Mercado General Hospital, Inc. It operates under three formats, namely mall-based multi-specialty clinics, stand-alone ambulatory or day surgery centers, and full-service hospitals.

The two companies launched the Qualimed brand last 2014, with a commitment to invest P5 billion in the next five years to build a chain of hospitals and satellite clinics, and also as a way for ALI to complete product offerings in its township developments. 

Asked how this would affect the QualiMed branches already open in ALI’s estates, Mr. Bengzon said there will be no material changes.

“Nandun naman sila sa Atria, sa San Jose del Monte, Altaraza, then sa Nuvali. They can continue to locate in our estates, whether we own it or not. Because our estate is attractive to locators, since you already have a self-contained community,” he explained.

The ALI executive also noted the hospital business comprises less than 5% of the total asset size of ALI, so its contribution to revenues is negligible.

“Today it’s also negligible, the contribution. So I don’t see it as having a significant impact on our 2020 targets,” he said.

The property giant is currently trailing a “2020-40 plan,” which was unveiled in 2014. Under the program, ALI projects to deliver a net income of P40 billion by 2020, or a 20% annual average growth rate from 2013 until 2020. This comes on the back of its aggressive expansion of residential projects, office developments, hotel and resorts, and the optimization of the use of land bank.

The potential divestment from QualiMed follows ALI’s recent exit from convenience store chain FamilyMart, in favor of Davao-based businessman Dennis A. Uy.

ALI, together with SSI Group, Inc. and two other foreign partners, announced its sale of FamilyMart to Mr. Uy last October, who in turn said it would complement his oil and fuel business through Phoenix Petroleum Philippines, Inc.

“In the case of FamilyMart, we think the brand can grow more under Phoenix. I guess the synergy for them is the 500 gas stations,” Mr. Bengzon said, referring to Phoenix Petroleum’s 518 fuel stations nationwide.

The hospital and convenience stores are not part of what ALI considers to be its core business segments. 

ALI generated a net income of P17.8 billion in the nine months ending September, 18% higher year on year as it continues the expansion of its residential and office properties. Revenues, meanwhile, grew 16% to P98.9 billion for the nine-month period. 

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Ayala Land to maintain same pace of mall, office developments in ‘18

PROPERTY developer Ayala Land Inc. (ALI) aims to exceed its pace of development of shopping malls and office spaces as the listed firm completes plans to reach its 2020 target.

Augusto Bengzon, the company’s CFO, said ALI aims to complete a total of 370,000 square meters (sq m) of combined mall and office spaces this year.

“This year I think we will open 190,000 sq m [of commercial-retail space], and the office space about 180,000 sq m. I guess if you look at our 2020 plan, we should be opening at least the same amount next year,” Bengzon said. “Hopefully more.”

He added the bigger malls that the country’s second-largest property company will be developing will mainly be in areas near and in Metro Manila and in Calabarzon (Cavite, Laguan, Batangas, Rizal and Quezon), where most of the economic growth of the country is seen.

“You just have to look at roughly where GDP  is created. And roughly we will launch project where GDP is strong,” Bengzon told reporters.

He said roughly 60 percent of the country’s GDP is in Mega Manila and Calabarzon. The company may also follow such rate of product launches in the coming years in these areas.

“The company’s robust growth fuels its optimism and keenness to achieve its net-income target of P40 billion in 2020,” Bengzon said.

ALI posted an 18-percent jump in net income to P17.8 billion in the first nine months of the year.

ALI’s recurring income businesses, mainly from shopping malls and offices, continue to grow its contribution to the revenues.

Shopping centers posted revenues of P11.8 billion, with its total gross-leasable area increasing to 1.7 million sq m.

In addition, offices contributed revenues of P4.47 billion and maintained its steady GLA growth to a total of 909,000 sqm as the business unit completed Circuit BPO Tower 2 and The 30th Corporate Center.

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...hotel accomodations expansion ng brand SEDA

Seda on track to reach 3,500 rooms by 2019

AYALALAND Hotels and Resort Corp. (AHRC) looks to meet the growing demand for hotel accommodations in Metro Manila and the Cebu-Mactan area as it continues to expand its homegrown hotel brand Seda.

Citing figures from the Department of Tourism, AHRC said Metro Manila will have a room gap of 69,185 by 2022, while the Cebu-Mactan area would be unable the demand for 14,931 more hotel rooms in the same period. This follows the surge of both foreign and local tourists in key destinations in the country.

With this, Seda hopes to bridge the gap by adding over 2,000 rooms across seven hotels until 2019, concentrated in central business districts in the metro as well as in Cebu.

The new Seda hotels will rise in El Nido, Palawan, ALI’s Circuit estate in Makati City, Arca South in Taguig, Ayala North Exchange in Makati, the Bay Area in Parañaque, Cebu Business Park, and the Cebu IT Park. The company will also be expanding its flagship branch, Seda Bonifacio Global City in Taguig, with the addition of 342 more rooms.

By 2019, the Seda hotel chain’s total capacity will reach 3,500, from its current count of 1,409. AHRC earlier announced it has committed to spend P15 billion for this expansion program.

“Being a wholly owned Filipino company, we have a deep understanding of opportunities in the market. We were the first to bridge the gap between the luxury and budget hotels by offering a modern facility with efficient service at competitive rates. Solid demand for our hotels continues to steadily grow,” AHRC Senior Group General Manager Andrea Mastellone said in a statement.

From starting with only 179 rooms in 2012, AHRC has managed to grow the Seda brand to its current capacity by offering new formats. The company noted it has started constructing bigger hotels with at least 250 rooms. Seda Vertis North in Quezon City for instance is its largest so far, with a capacity of 438.

Seda is also working on improving its services by tapping institutions such as the American Hotel and Lodging Educational Institute to train its managers. This complements the hotel’s in-house courses.

“Once a new employee has embraced our culture, we then proceed with the technical training to improve skills. Training and development have been key to our success and we will continue to invest resources in this area so staff are empowered to create memorable guest experiences,” Mr. Mastellone said.

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ALI tightens grip on Malaysian developer

REAL ESTATE giant Ayala Land, Inc. (ALI) signed a deal to cement its control over Malaysian developer MCT Bhd. that could set the stage for a mandatory takeover offer for the remaining shares held by minority investors.

The property arm of Ayala Corp. said in a disclosure on Tuesday its wholly-owned subsidiary Regent Wise Investments Limited (RWIL) inked a conditional share purchase agreement to buy an additional 17.24% stake in MCT Bhd.

In a filing with Bursa Malaysia, MCT disclosed that Ayala Land will acquire 230.16 million ordinary shares from Tan Sri Dato’ Sri Goh Ming for a cash consideration of RM 202.50 million.

The transaction will jack up ALI’s interest in MCT to 50.19% from 32.95%, breaching the 33% trigger point for extending a mandatory takeover offer, according to the Capital Markets and Services Act and the Malaysian Code on Take-Overs & Mergers.

This will force RWIL to launch a mandatory takeover offer in accordance with the laws of Malaysia once the agreement becomes unconditional, Ayala Land said.

The precedent involves obtaining a waiver from Bursa Malaysia Securities Clearing Sdn Bhd to allow for 51% of the cash consideration to be settled in tranches to the selling party, MCT said.

“This increase in ownership will strengthen ALI’s commitment to enhance MCT’s operations and expand its business further,” the real estate firm said, citing its “solid track record in developing large-scale, integrated, mixed-use and sustainable estates across the Philippines and in growing its diversified product lines.”

“This will also provide ALI with a greater opportunity to take advantage of the growth potential and long-term prospects of the real estate sector in Malaysia and will affirm ALI’s role as a key player in the ASEAN property sector.”

Ayala Land bought a 9.16% interest in MCT in April 2015, marking its first investment in Southeast Asia. Eight months later, it exercised its option to buy additional shares and boost its stake to 32.95%.

Founded in 1999 as a construction company, MCT is a property development company specializing in mixed-use projects that include retail, office, hotel, and mid-range to affordable residential properties.

Ayala Land President Bernard Vincent O. Dy previously said it continues to scout for opportunities in Southeast Asia, identifying Vietnam, Myanmar and Indonesia as potential investment destinations.

Under its 2020 Vision, Ayala Land is targeting a 20% annual growth rate to hit a net income of P40 billion.

For the first nine months of 2017, ALI saw an 18% increase in earnings to P17.8 billion, on the back of a 16% growth in revenues to P98.9 billion

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...more details on the Malaysian buyout

Ayala to buy out MCT’s minority shareholders

AYALA LAND, Inc. (ALI) has launched an offer to buy out the minority shareholders of MCT Bhd. after securing control of the Malaysian developer.

The real estate arm of the Ayala group said in a disclosure to the stock exchange on Monday its subsidiary Regent Wise Investments Limited (RWIL) issued a notice of an unconditional mandatory takeover offer to the board of directors of MCT to acquire all the remaining shares of the company that are not owned by the ALI unit.

RWIL is required to undertake the offer in accordance to the Capital Markets and Services Act and the Malaysian Code on Take-Overs & Mergers after breaching the 33% trigger point.

Last week, RWIL entered into conditional share purchase agreement with MCT non-executive director Tan Sri Goh Ming Choo for the acquisition of his 17.24% stake in the Malaysian company for RM 202.50 million.

The deal effectively raised Ayala Land’s interest in MCT to 50.19%, cementing the Philippine real estate giant’s control over the latter.

Ayala Land kicked off the offer after the agreement became unconditional following the receipt of a waiver from Bursa Malaysia to allow for 51% of the cash consideration to be settled in tranches, MCT said in a separate filing.

Securing control of MCT will strengthen Ayala Land’s commitment to expand the developer and provide the Philippine company to participate in the favorable prospects of the real estate sector in Malaysia, its first investment in Southeast Asia.

Ayala Land bought a 9.16% interest in MCT in April 2015 then exercised its option to buy additional shares and boost its stake to 32.95% eight months later.

Under its 2020 Vision, Ayala Land is targeting a 20% annual growth rate to hit a net income of P40 billion.

For the first nine months of 2017, ALI saw an 18% increase in earnings to P17.8 billion, on the back of a 16% growth in revenues to P98.9 billion.

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ALI to start works on Taguig ITX in H2

Ayala Land Inc. (ALI), which broke ground Wednesday on the Taguig Integrated Terminal Exchange (ITX) formerly called Integrated Transport System – South, is set to begin construction works in the second half.

In a statement, the Department of Transportation (DOTr) said the construction works would begin in the second half.

The project will cover a six-story building on a 5.57-hectare property inside the Food Terminal Inc. (FTI) compound which would have passenger concourse, a centralized ticketing area and several business and retail establishments.

It will also have a provision for 1,200 public utility buses and vehicles’ bays and parking.

When completed, the Taguig ITX can accommodate 4,000 buses and 160,000 passengers daily.

It will also feature a pedestrian walkway connection to the Philippine National Railways FTI station and the proposed subway system.

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The Taguig ITX will cater to all provincial buses plying the south of Luzon, Visayas and Mindanao destinations.

ALI was awarded the project under the public-private partnership program during the previous administration after it submitted the lowest annual grantor payment (AGP) of P277.9 million.

AGP is the payment the government will make to the concessionaire.

When AGP offers are made by firms, the lowest bid is declared the winner.

DOTr Secretary Arthur Tugade held discussions with ALI to forego the AGP which is supposed to be paid on a yearly basis for 35 years.

Based on the discussions, Tugade said the parties were able to come up with a win-win solution.

“Two things will be done – the P277 million per year for the next 35 years will no longer be paid, saving the government, this country, no less than P9 billion cashout annually. And two, from the start of its commercial operation, until the end of the concession agreement, ALI will share two percent of their income from the commercial spaces in favor of the government,” Tugade said.

The Taguig ITX, which would contribute to decongesting EDSA, is expected to start operations by the first half of 2020.

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Ayala, Eton to invest P53B in township

AYALA LAND, Inc. (ALI) and tycoon Lucio Tan’s Eton Properties Philippines, Inc. (EPPI) are investing P53 billion to develop the first phase of a 35-hectare estate covering areas in Quezon City (QC) and Pasig City.

The property companies have formed a 50-50 joint venture firm called ALI Eton Property Development Corp. (AEPDC) which will develop ParkLinks, envisioned to be the “greenest urban estate” offering residential, office, and commercial spaces.

“By forging together, we are able to have an estate that has scale and access that will capture both Quezon City and the Pasig markets. And our combined experience will result to designs that will differentiate ourselves in this corridor,” ALI Senior Vice-President and Strategic Landbank Management Group Head Anna Ma. Margarita “Meann” B. Dy said in a speech during the project’s launch on Thursday.

AEPDC will build a 110-meter bridge over the Marikina river, linking QC and Pasig.

“This will create a new route that will help ease vehicular traffic in the northeast and east of Metro Manila. The bridge will have dedicated lanes for bikers and pedestrians, allowing a safe and convenient commute within and around the development,” the company said.

Ms. Dy noted the company is now preparing plans for the steel bridge, as well as talking with the local government units of Pasig and QC, and the Department of Public Works and Highways for the permits needed to proceed with the project.

The first phase of ParkLinks will cover less than half of the whole estate or 16 hectares, with a gross floor area of 677,000 square meters (sq.m.). Of the total funding commitment for the first phase, 75% will be allocated for residential projects, 17% for leasing businesses, and 8% for estate development.

AEPDC will be building a 58,000-sq.m. regional mall and a residential project by AyalaLand Premier (ALP) inside the estate this year. The mall will be located along C-5 road, and will house a 3,500-sq.m. sports complex complete with a basketball, volleyball, and badminton courts, a fitness gym, and dance studio. The mall is set to open in 2021.

The first tower of the ALP project will be launched by the fourth quarter of this year. ALP plans to launch four more towers over the next five years, with 1,688 residential units.

Meanwhile, ALI’s high-end residential brand Alveo will also be constructing five towers in the first phase, offering 3,700 residential units. The first tower will be launched in 2019. Asked whether Eton Properties will also be introducing its real estate brands into ParkLinks, Chief Operating Officer Josefino C. Lucas explained that they chose to adopt ALI brands instead.

“It’s really a branding exercise. We participate here equally. In terms of having a brand here by Eton, it’s not in the current discussion,” Mr. Lucas said.

For the second phase of the project, ALI Assistant Vice-President for Strategic Landbank Management Group Ma. Carmela K. Ignacio said funding could reach over P60 billion, taking into account appreciation of land values by then.

“For the second half (the investment) might be higher than P60 billion, so the total is more than a hundred. There will be more residential, there will be other retail centers in the Pasig side, and then more offices,” Ms. Ignacio told reporters.

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...good management decision

Ayala Land aims to neutralize its carbon footprint by 2022

THE ENVIRONMENT is taking the spotlight in the boardroom of Ayala Land, Inc. (ALI), as the Philippine property giant works on incorporating more sustainable practices in its business to neutralize its carbon footprint by 2022.

Ayala Land has committed to undertake an aggressive carbon-neutral program that will offset the projected 490,000 tons of carbon emissions from its commercial properties by 2022, ALI Sustainability Manager Anna Maria M. Gonzales said in a briefing on Wednesday.

These emissions are generated through the company’s activities such as fuel burning and energy consumption.

Given its presence in 55 growth centers, Ayala Land said the program reflects its commitment to sustainable and responsible property development, recognizing the need to address and mitigate the impact of its development and expansion plans to the environment.

To achieve its goal, Ayala Land is embarking on a three-pronged approach by dedicating 450 hectares of its land bank to carbon forests along with efforts to implement passive cooling design in its developments, and shift to renewable energy.

By the end of the program, the real estate company expects the usage of renewable energy in its malls, offices and hotels to increase to 80% from the current 10%.

Ayala Land is setting aside 4.5% of its land bank to forests with the capacity to hold 68,000 tons of carbon dioxide equivalent across five sites located in different parts of the Philippines.

Forests sites in Lio and Sicogon are integrated into the estate’s master plan, while the Alaminos site lies north of a BellaVita subdivision. The Kan-Irag and Talomo sites are located in the cities of Cebu and Davao.

And the cost of its pledge to develop carbon forests? Ayala Land is spending a mere P42 million until 2022 — an insignificant amount compared to its planned P88-billion capital spending last year.

“It is very affordable, that’s why we hope other people can do it,” Ms. Gonzales said.

The developer worked with the Center for Conservation Innovations, Inc. for a study to determine the baseline carbon stock in these carbon forest sites.

Through a process called carbon sequestration, the carbon forest sites remove carbon dioxide from the atmosphere. Although forests do release carbon dioxide from their natural processes, a healthy forest typically stores carbon more than it releases it.

The study also identified the best protection and enhancement approach through assisted natural regeneration (ANR) and other methods to maximize the carbon storage potential for each site.

ANR initiatives are activities that support forest regrowth through protection, tending of diverse native wildlings found on site and enhancement planting of other indigenous species.

ALI has partnered with community-based, nongovernment organizations like Pusod, Inc., Soil and Water Conservation Foundation and Philippine Eagle Foundation.

“We believe our carbon forest is not exactly a product but it is still another way of creating value for the environment and for us give back to the communities that have been hosting us all these years,” Ms. Gonzales said.

Ayala Land has been tracking its greenhouse gas emissions among other environment, social, governance metrics throughout the various stages of its project development process. Its sustainability report is reviewed by DNV GL, a Singapore-based global quality assurance and risk management company.

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...good news

ALI earnings rise 21% as property sales recover

AYALA LAND, Inc. (ALI) reported its attributable profit rose 21% in 2017, driven by the resurgence of property sales and sustained leasing business.

The listed property developer said in a statement on Wednesday that net income attributable to the parent stood at P25.3 billion in 2017, following a 14% uptick in revenues to P142.3 billion.

ALI attributed the higher revenues to the recovery in property sales for the year, inching up 13% to P122 billion, against a modest growth of 3% in 2016.

“We are pleased with our 2017 business results. All major product lines posted strong growth, with property sales coming in at the higher end of our estimates and leasing income increasing in line with our planned asset build up,” ALI President and Chief Executive Officer Bernard Vincent O. Dy said in a statement.

ALI Chief Finance Officer and Treasurer Augusto Cesar D. Bengzon said in a presentation that international sales, or sales to overseas Filipinos and non-Filipinos, accounted for more than a third of total sales, or P41.6 billion. This is 32% higher than the market’s contribution in 2016.

Of this percentage, 49.4% were Chinese, followed by Americans at 15.2%. Other nationalities such as Singaporeans, Taiwanese, Hong Kong, Japanese, and South Koreans accounted for the remaining portion.

“We see what happened with the warming of relations with China. There are a lot more Chinese tourists, we’re also seeing it now in the property sector,” Mr. Dy said in a press briefing in Makati City on Wednesday.

The leasing business contributed P31 billion to the company’s top-line, 10% up year on year from the completion of more malls, offices, hotels, and resorts.

In terms of project launches, ALI brought into the market P88.8 billion worth of residential and office developments.

For 2017, the company’s actual spending reached P91.4 billion, 48% of which poured into residential developments, 29% for commercial leasing projects, and 23% for land acquisition and estates.

For the mall segment, revenues came in at P17.7 billion, 10% higher year on year. Last year, ALI added five malls to its portfolio, with a combined gross leasable area (GLA) of 189,000 square meters (sq.m.). The malls are Ayala Malls The 30th, Ayala Malls Vertis North, Ayala Malls Cloverleaf, Ayala Malls Marikina, and Ayala Malls Feliz. 

This brought the company’s GLA from shopping centers to 1.8 million sq.m.

Under office leasing spaces, ALI posted revenues of P6.7 billion, higher by 12% from 2016 figures. The company opened six office buildings last year with a GLA of 185,000 sq.m., for a total of 1.02 million sq.m. under the segment.

Meanwhile, the hospitality business added six new facilities, including Seda Vertis North, pushing the number of rooms under the company’s portfolio to 2,583 rooms. With this, revenues from the hospitality segment grew 12% to P6.6 billion for the year.

The company ended the year with a total of 25 estates, with the opening of Evo City in Kawit, Cavite; Azuela Cove in Lanang, Davao; and Seagrove in Mactan, Cebu. This brought ALI’s total land area for estates at 275 hectares.

“Further, we continue to expand our estates and land bank around the country — putting us in a good position to continue to benefit from the strong performance of our economy,” Mr. Dy said.

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