Corporate News

By Claire-Ann M. C. Feliciano, Senior Reporter

Ayala Land capex to be partly funded by debt

Posted on January 14, 2015

THE PROPERTY arm of diversified conglomerate Ayala Corp. plans to fund a portion of its P100-billion capital expenditure (capex) program this year through a fresh round of borrowings, a senior company official told reporters in Makati City yesterday.

This came after Ayala Land, Inc. successfully raised P16 billion via placement of 484,848,500 common shares at P33 apiece.

“The recent top-up placement is part of the sources of funding. Of course, we will still borrow a little bit more and draw on the cash flow from operations that we will generate,” Jaime E. Ysmael, Ayala Land chief financial officer, said on the sidelines of the inaugural meeting of the Financial Executives of the Philippines (FINEX).

Pressed for details on the planned borrowings, Mr. Ysmael said: “I don’t want to give the exact amount yet but probably 10% to 15% maximum [of the capex] is the range we’re looking at.”

“I think it’s more on the P10-billion range. We already have P16 billion so that should tie us this year,” the official, who was also inducted as this year’s FINEX president, said.

The borrowings, according to Mr. Ysmael, will be a combination of bilateral loans through Ayala Land subsidiaries, as well as potential bond issuance.

“We don’t have any definite financier yet but we would like to structure our long-term borrowings to mirror the development of the sector,” he said. “So ideally seven to 10 [years] but it depends on the appetite of the market; if not, maybe five to seven. We also want to manage our maturities so we calibrate along those lines.”

He added that the corporate bonds will primarily be peso-denominated

Mr. Ysmael said Ayala Land wants to raise the funds “just in time.”

Ayala Land on Monday bared its P100-billion capex program for 2015, which is higher than last year’s P70-billion budget.

The aggressive investment forms part of the company’s expansion plan, which involves growing its portfolio and boosting its profit to P40 billion by 2020.

The property developer also plans to launch this year the unfinished tower owned by Senator Juan Ponce Enrile along Ayala Avenue.

The JAKA Tower, which has been already acquired by Ayala Land at a “reasonable” price, will be inaugurated as an office building, Mr. Ysmael said.

“We’re already planning for its launch as an office tower. That will provide us with additional revenue source,” he said, noting that the development will likely be under Alveo Land Corp., a subsidiary of Ayala Land.

Several adjustments will still be made on the original building’s plan, Mr. Ysmael said, adding that the edifice remains “structurally sound.”

“Hopefully, we can launch the project within the year,” Mr. Ysmael said, adding this will involve pre-selling of office spaces.

“Completion [of the building] will probably be three to four years from now,” he added.

JAKA Tower was originally designed as a 49-storey skyscraper, which was then a joint venture between Mr. Enrile and JAKA Property Group.

The building’s construction began in 1996 but it failed to proceed since the Asian financial crisis -- which hit property developers -- took place the year after.

Shares of Ayala Land closed at P34.15 apiece yesterday, 15 centavos or 0.44% up from Monday’s P34 apiece.