Ayala Land leans on leasing, trims spending amid global risks

AYALA LAND, Inc. (ALI) said it is scaling back capital spending and leaning more heavily on its leasing business as global uncertainties weigh on the property sector, signaling a more defensive stance.

“There’s no doubt that the Middle East crisis is a significant disruptor, especially for the property development industry,” ALI Chairman Jaime Augusto Zobel de Ayala said during the company’s annual stockholders’ meeting on Thursday. “In times like these, our top priority is stability over aggressive growth.”

He said the company is focused on preserving liquidity and maintaining flexibility.

“We’re focused on ensuring ample liquidity and maintaining the flexibility to act swiftly when the environment improves,” he said. “We have also scaled down our capital expenditure (capex) plans as part of our balance sheet management.”

ALI had planned P70 billion to P80 billion in capital expenditures this year, about 38% for leasing. In 2025, it spent P92.9 billion, with 38% for property development, 29% for leasing expansion, 18% for estate build-out, and 15% for land acquisition.

Mr. Zobel said the company is also adjusting its development pipeline, noting it will “manage our residential launches and reduce our inventory” while strengthening recurring income streams.

“The strategy we put in place is to pivot towards leasing through expanding our leasing footprint and reinventing our malls and hotels,” he said. “Our focus on building a stronger recurring income business is precisely to help us weather disruptions and cycles with more dependable revenue streams.”

The company also cited macroeconomic pressures, including “rising inflation, elevated interest rates, and a weaker peso,” as additional headwinds.

In its latest disclosures, ALI said property development accounted for about 65% of its real estate revenues in 2025, while leasing and hospitality contributed 28% and services 7%.

EARNINGS PERFORMANCE

ALI President and Chief Executive Officer Anna Ma. Margarita B. Dy said leasing is expected to drive growth over the medium term.

“Our leasing business is expected to remain on a growth trajectory and will be the primary driver of our company’s expansion,” she said.

She added that all new leasing projects over the next three years will be located within the company’s estates.

For 2025, ALI reported consolidated net income of P39.1 billion, up 38.7% from P28.2 billion in 2024, driven by leasing and hospitality and gains from portfolio management.

Leasing and hospitality revenues rose 7% to P48.7 billion from P45.6 billion. Shopping center revenues increased 5% to P24.2 billion from P23 billion, while office leasing revenues reached P12.2 billion. Hospitality revenues climbed 9.3% to P10.6 billion from P9.7 billion, boosted by the New World Makati Hotel acquisition.

“By 2027, we expect earnings before interest, taxes, depreciation, and amortization to be roughly balanced between leasing and development,” Ms. Dy said.

Mariana Zobel de Ayala, president of Ayala Malls and head of the leasing and hospitality group, said the company plans to expand its retail footprint.

“Looking ahead to 2026, we will open over 200,000 square meters of new retail space, our largest annual addition in history,” she said.

She added reinvestments in malls and hotels are expected to deliver a “15-20% uplift in rents and room rates upon stabilization.”

ALI is also expanding into industrial real estate, including cold storage facilities.

The company maintained a disciplined approach to its residential business, reporting sales of P125 billion in 2025 despite launching 42% fewer projects, while inventory improved to 19 months.

Chief Finance Officer Jose Eduardo A. Quimpo II said ALI continues to recycle capital, including through asset infusions into AREIT, Inc.

“We are not passively holding assets. We are constantly optimizing the balance sheet to catalyze returns and maximize value,” Mr. Quimpo said.

ALI returned 65% of its prior-year income to shareholders through dividends and share buybacks.

The company said its balance sheet remains strong, with net gearing at 0.78:1 supported by predominantly long-term fixed-rate debt.

“We have always deliberately kept our balance sheets strong so we can withstand periods like this, and just as importantly, position ourselves to capture opportunities when they emerge,” Mr. Zobel said.

At the local bourse on Thursday, ALI shares fell by 0.85% to P16.34 each. — Alexandria Grace C. Magno