Ayala Land, Inc.
...increasing warchest

ALI boosts capex to P111B in 2018

AYALA LAND, Inc. (ALI) is ramping up spending for 2018, as the property giant sees solid demand for residential projects.

ALI Chief Finance Officer Augusto Cesar D. Bengzon said this year’s P110.8-billion capital expenditure budget is higher than the annual average of P80 billion it spent from 2013 to 2017.

“I think this year, 2018, will be a landmark year. It’s a transition for the company given that we see good prospects for the market and at the same time, we recognize that we have that platform that we can unlock,” Mr. Bengzon said in a press briefing in Makati City on Wednesday.

The 2018 capital spending is 21% higher than the P91.4 billion ALI spent in 2017. The company has originally set its 2017 capex at P88 billion, but said that they were prompted to spend more given the strength of demand from the property sector.

Residential projects will account for 43% or P47.4 billion of this year’s capex, while 17% or P18.7 billion will be poured into mall projects. Around 12% or P14 billion will be allocated for land acquisitions.

Meanwhile, P8.5 billion will be used for office projects, and P8.8 billion will be for the development of existing estates. ALI also continues to develop its hotels and resorts business, with an allocation of P7 billion for the year.

The remaining P6.4 billion will be spent for services and other investments.

ALI also plans to launch P125 billion worth of projects this year. This is 25% higher than the company’s goal of launching up to P100 billion worth of projects last year.

Mr. Bengzon, however, noted ALI was not able to reach its target project launches last year, unveiling 28 projects worth only P88 billion.

Majority of the projects in the pipeline are residential and offices for sale, which will account for P100 billion of projects to be launched this year. The residential projects will be under its AyalaLand Premier, Alveo, Avida, Amaia, and BellaVita brands.

ALI said it will launch two estates in 2018, one located in the Visayas-Mindanao area and another in Quezon City, noting the latter will be a pocket development covering 11 to 12 hectares.

The company currently has 25 mixed-use estates, and a developable land bank of 10,285 hectares.

The remaining P25 billion will be used to develop leasable properties such as malls and offices.

This year, ALI will open two new shopping malls, the first being One Bonifacio High Street in Bonifacio Global City, Taguig. Scheduled to open in March, the mall has a gross leasable area (GLA) of 23,000 square meters.

Set to open in June is Circuit Mall, located in the company’s mixed-use estate in Makati City. The mall will have a GLA of 54,000 sq.m. This will bring ALI’s GLA from malls to 2.57 million sq.m., after ending 2017 with 1.8 million sq.m.

For its office segment, ALI will be opening Ayala North Exchange HQ in Quezon City with a GLA of 20,000 sq.m. in June, and Vertis North BPO 3 with a GLA of 38,000 sq.m. The additional spaces will supplement the company’s 1.02 million sq.m. of leasable space as of end-2017.

“We now have a very broad leasing base, firmly the second largest mall operator in the country… and the largest office landlord in the Philippines today,” Mr. Bengzon said.

To fund this year’s capex, ALI is looking to tap the bond market after other issuers, specifically San Miguel Corp. and SM Prime Holdings, Inc., have conducted their bond offerings.

“You should expect us to be going out very soon, for a combination of bonds and we will also do some bilaterals because there are banks that continue to offer us very good rates,” Mr. Bengzon said.

“The capex roughly will require us to raise about P20 billion, so we’re looking at half from the retail bond segment, and the half from bilaterals owing to banks,” he added.

ALI’s attributable profit grew 21% to P25.3 billion in 2017, as revenues penciled in a 14% increase to P142.3 billion during the period.

...naks Tongue

ALI in list of world’s most sustainable companies

AYALA LAND, Inc. (ALI) is the only Philippine company included in The Sustainability Yearbook 2018 as one of the most sustainable companies in the world.

In a statement, ALI said the company was 16 points away from the global industry best, narrowing the previous year’s 24-point gap.

Released annually by RobecoSAM, the Sustainability Yearbook is considered the world’s most comprehensive publication on corporate sustainability. To be included, a company must be within the top 15% of its industry and must get a score within 30% of its industry’s top performing company.

The property giant is 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.

Among its initiatives include “natural light and cooling design, energy efficiency, renewable energy sourcing, and carbon offset mechanisms such as forest regeneration and protection,” ALI said.

To meet its goal, ALI is taking 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% or 450 hectares (has.) 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. These “carbon forests” are located in Lio, Palawan (50 has.); Sicogon, Iloilo (148 has.); Alaminos, Laguna (133 has.); Kan-Irag, Cebu (63 has.) and Talomo, Davao City (54 has.)

“As we continue to track our various environmental, social, governance (ESG) metrics in pursuit of carbon neutrality, our inclusion in this year’s Sustainability Yearbook is a reflection of the company’s holistic commitment to environmental conservation,” ALI Sustainability Manager Anna Maria M. Gonzales was quoted as saying in a statement.

RobecoSAM conducts its Corporate Sustainability Assessment every year with a survey of over 3,900 listed companies around the world that are eligible for inclusion in one of the Dow Jones Sustainability Indices.

Reply raising

Ayala Land plans to raise up to P25 billion

AYALA LAND, Inc. (ALI) plans to raise up to P25 billion from a combination of retail bonds, loans, and qualified buyer notes this year to partially finance its aggressive spending program and to refinance existing debt.

In a disclosure to the stock exchange on Wednesday, ALI said its board of directors approved the plan to raise as much as P20 billion through retail bonds and bilateral term loans, which will be used to fund the company’s P110.8-billion capital expenditure budget this year.

The retail bonds will be issued from the P50-billion shelf registration program the company has with the Securities and Exchange Commission since March 2016, which will then be listed in the Philippine Dealing and Exchange Corp. (PDEx). In an earlier interview, ALI Chief Finance Office Augusto Cesar D. Bengzon said the company has P18 billion left in this debt securities program.

Meanwhile, the listed property firm’s board has also approved the issuance of qualified buyer notes to raise up to P5 billion for the refinancing of its short-term loans.

The company previously raised P3.1 billion in short-dated notes, which were also listed at the PDEx, last November 2017 to finance its short-term debt.

ALI has committed to spend P110.8 billion in capital expenditures this year, 21% higher than its actual spending of P91.4 billion in 2017, to support the demand for more residential properties in the country. Around 43% of the capex or P47.4 billion will be allotted for residential projects, 17% or P18.7 billion for mall projects, 12% or P14 billion for land acquisitions.

The remaining portion allocated for the hospitality business and the development of existing estates.

The accelerated capex comes alongside the plan to launch P125 billion worth of projects this year, against the P88 billion worth of projects unveiled in 2017.

Meanwhile, ALI said it has also completed the unconditional mandatory take-over offer made by its wholly owned subsidiary, Regent Wide Investments Ltd. to minority shareholders of Malaysian developer MCT Bhd.

The company undertook the mandatory take-over offer after it increased its stake in MCT to 50.19% in January, adding 17.24% to its original share. With the transaction, ALI was able to further raise its stake in the company to 72.31%, after taking over some 295.28 million shares held by minority shareholders, or 22.12% of MCT’s total outstanding shares.

ALI initially purchased a 9.16% interest in MCT back in April 2015, which was the company’s first investment in Southeast Asia. The company has since been propping up its stake in MCT, which allows ALI to take advantage of the growing real estate sector in Malaysia.

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

ALI’s attributable profit grew 21% to P25.3 billion in 2017, driven by the 14% increase in revenues to P122 billion amid strong demand for residential projects in the country

PCC green-lights ALI-RALI deal

THE COUNTRY’S anti-trust body has given the go-signal for two joint venture deals last week, one of which involves property giant Ayala Land, Inc. (ALI)’s partnership with Royal Asia Land, Inc. (RALI) to develop a mixed-use estate in Cavite.

In a statement issued Thursday, the Philippine Competition Commission (PCC) said the partnership between ALI and RALI does not result in substantial lessening of competition in their respective relevant markets.

The two firms are currently forming a 50-50 venture company that will acquire, own, and develop a 936-hectare property that covers Silang and Carmona in Cavite. The project is slated to house both commercial and residential components.

Under the deal, ALI will act as the property’s project and development, and sales and marketing manager. It will receive 12% of the joint venture company’s gross revenues for the development management fee, and 5% for the sales and marketing fee.

On the other hand, RALI will participate in the planning and development of the property, which entitles it to a 2% share in the joint venture’s gross revenues.

At the same time, the PCC also approved the proposed partnership between Markham Resources Corp. (MRC) and Alternergy Mini Hyrdo Holdings Corp. (AMHHC) to operate three mini hydro projects, namely Kiangan Mini Hydro Corp., Ibulao Mini Hydro Corp., and Lamut-Asipulo Mini Hyrdo Corp.

The three firms will collectively be called Markham-Alterenergy joint venture companies, which will operate, develop, and maintain run-of-river mini-hydro projects located across Asin, Ibulao, Hungduan, Lamut, and Panubtuban in the Ifugao province.

The PCC described MRC as a local firm whose core business is in electricity generation and/or distribution and/or hydropower plants. On the other hand, AMHHC’s business is focused on the sale, assignment, transfer, mortgage, pledge, exchange, or other disposition of real and personal property.

The PCC noted there are enough players in the relevant market that provide competitive constraints for such a joint venture, allowing MRC and AMHHC to proceed with the transaction.

Companies undertaking merger and acquisition transactions, including joint ventures, whose value meet the P1-billion threshold set out under the Philippine Competition Act must secure the PCC’s approval before closing a deal.

So far, the PCC has received 151 notifications for merger and acquisition transactions with a combined value of P2.25 trillion across the manufacturing, financial, electricity, real estate, and transportation sectors. Of this, 41 are global mergers.

Earlier this week, PCC Chairman Arsenio M. Balisacan said the agency is preparing a proposal that will raise the P1-billion threshold for reporting M&A deals.

The private sector has been pushing for a higher notification threshold since the P1-billion level is considered too low, overburdening the PCC and creating delays for companies involved in M&A deals.

...Ayala unit

Alveo records P45.6B in sales

ALVEO LAND Corp. reported P45.6 billion in sales take-up in 2017, breaching its initial target of P40 billion for the year, boosted by the robust take-up for residential lots and condominium units.

The wholly owned unit of Ayala Land, Inc. (ALI) said this is 20% higher than the P38-billion sales take-up recorded in 2016.

“The market segment is still very robust. There’s a lot of resources in terms of cash, domestically. So there’s a lot of confidence there in the market… The demand will continue to be there,” Alveo Land President Jennylle S. Tupaz said in a press briefing on Tuesday.

The company saw the fastest growth in sales for residential lots at 29% to P8.2 billion. The fastest-selling among Alveo Land’s projects were residential lots inside The Residences at Evo City, ALI’s mixed use estate in Kawit, Cavite. It was able to sell out all of the 395 lots, priced at an average of P9.7 million each, in one day.

Condominium units, meanwhile, made up bulk of the company’s sales for the year at P26.3 billion, up 24% from the P21.3-billion sales recorded a year ago. Offices also grew 7% to P10.8 billion.

Alveo Land started 2017 with an inventory or P25.8 billion, supplementing it with P33.2 billion in launches, for a total inventory of P59 billion for the year. Of the total take-up for 2017, P29.2 billion came from its sustaining inventory, while P16.4 billion came from new launches.

Most of the properties sold were located in Makati City, which the company attributed to the performance of ALI’s mixed-use estate in the area called Circuit Makati. Alveo Land’s projects in the 21-hectare estate include residential buildings Solstice and Callisto, and an office project called The Stiles Enterprise Plaza.

“For 2017, Alveo actively marketed several residential and office projects in Makati, Pasig, Quezon City, and South Luzon. In terms of overall take-up, Makati continues to be a preferred location by both local and foreign markets,” Ms. Tupaz said in a statement.

International sales, meanwhile, accounted for 26% of total sales for the year, led by China, Hong Kong, and North America. The company said investor confidence in the economy is attracting foreigners to purchase property here.

This year, Alveo Land looks to launch over P40 billion worth of projects consisting of around 6,000 units. This is double the number of units the company launched in 2017, as it pursues more horizontal projects outside Metro Manila.

The company will be entering two new areas this year — Bulacan and Cagayan de Oro — where it will sell residential lots.

Asked for the company’s target sales take-up for the year, Ms. Tupaz said it wants to “stay at that level or even higher than that.”

“We have to source our growth not just in the CBDs (central business districts) where land is limited so we’re really gonna have to go out and tap new markets. And it’s good, maganda ang economy ngayon (the economy is doing well),” Ms. Tupaz said. 


ALI unit expands Davao luxury residential project

AYALA LAND Premier (ALP) is launching the second tower of its luxury residential project in Davao City within the year, after seeing strong demand for the first tower where it generated P2.6 billion in sales.

The luxury unit of Ayala Land, Inc. (ALI) said on Wednesday it has sold out the first tower of The Residences at Azuela Cove during its launch last May 12. The 21-storey seaside tower offers 70 three-bedroom units spanning 181 to 196 square meters (sq.m.), priced at around P36.7 million each.

It also has two penthouse units with four bedrooms each. The 377-sq.m. penthouse unit is priced at P80.8 million each. This indicates a selling price of P194,000 per square meter, making it the most expensive residential property in Davao City.

The company said Davao-based individuals purchased around 70% of the units, while 15% came from Manila residents that had businesses or families in Davao. The remaining 15% came from buyers abroad and neighboring provinces.

“Given the good response for the North Tower, we’re gearing up for the launch of the second tower. And we expect to launch the second tower in the next few months, so very soon,” ALP Head of Sales Paolo O. Viray said in a press briefing on Wednesday.

Mr. Viray said the company will be raising prices of units by 8-10% for the second tower, which could deliver around P3 billion in sales from 77 units.

ALP will be adding garden units at the ground floor of the second tower, instead of the amenity area that will cover the first tower’s ground level.

Mr. Viray said both towers will be completed by 2023, with turnover to residents expected by the end of that year.

Amenities include a residents’ lounge, fitness center, social hall, a 25-meter lap pool, kiddie pool, and play area.

The Residences sits on a one-hectare property within Azuela Cove, ALI’s P20-billion mixed-use estate in Davao City through a 60-40 joint venture partnership with the Alcantara Group of Companies. The project is the first residential development to rise within the 25-hectare property in Lanang, Davao.

Alcantara Group Executive Vice-President Anton M. Hechanova said this is the first high-rise development under their portfolio. Asked if they plan on pursuing more similar projects, the executive said they are still studying its prospects.

“Possible, the Alcantara group we have a lot here in Mindanao. We’re nurturing the area. Our power business alone has thousands of hectares. There are untapped areas in the power location that we might get into. At the moment we’re studying those options,” Mr. Hechanova said during the briefing.

ALI’s development of Azuela Cove started in 2017, and will continue for the next seven to 12 years.

Operational areas inside Azuela Cove include The Shops — a retail strip featuring various restaurants, a 2,000-sq.m. event tent operated by Enderun Colleges which can accommodate up to 1,500 people, and a standard-sized soccer field, basketball court, and volleyball court. The sports facilities are managed by SPARCorp., a company that includes members of the Davao sports and business communities.

Azuela Cove will also house the first St. Luke’s Medical Center outside of Metro Manila. The medical facility will have 250 beds and will be operational by 2022.


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