ALI boosts capex to P111B in 2018

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The park and garden portion of Ayala Land Inc's Greenbelt shopping and dining complex is seen at the heart of a business district in Makati city, metro Manila March 11, 2016. -- REUTERS

By Arra B. Francia, Reporter

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.

Shares in ALI were down by 50 centavos or 1.11% to close at P44.60 apiece at the stock exchange on Thursday.