By Arra B. Francia, Reporter
AYALA LAND, Inc. (ALI) is furthering its international ambition with the acquisition of a four-hectare property in Malaysia’s capital city for P2 billion, seeking to transform it into a residential area.
The listed property giant said its board of directors approved on Wednesday the purchase of the property located in Klang Valley, Kuala Lumpur. The acquisition was made through MCT Bhd., where ALI has secured a majority stake in the Malaysian property developer.
“Now that we are majority owner, we need to continue to expand in the area…(the property in Klang Valley) is our first land acquisition in Malaysia since we participated in MCT Bhd,” ALI President and Chief Executive Officer Bernard Vincent O. Dy said in a press briefing after the company’s annual shareholders’ meeting in Makati City on Wednesday.
ALI looks to break ground for the project by next year, with 90% of the area allotted for both horizontal and vertical residential projects. The remaining 10% will be occupied by leasing spaces.
The development will target the middle income segment in Malaysia, with prices to start at around 750,000 ringgit, equivalent to around P10 million.
This will be MCT Bhd.’s fourth project in Klang Valley, as it is also currently constructing Cybersouth, Cyberjaya, and One City in the area.
ALI Group Head for Strategic Land bank management Anna Ma. Margarita B. Dy said that the company is looking at two more sites in Klang Valley for future expansion.
“We really want to be in multiple sites in Klang Valley, offering an affordable residential product,” Ms. Dy told reporters on the sidelines of the media briefing.
Ms. Dy said the company will first focus on residential projects in Malaysia given the current demand for the product, with plans to venture into leasing projects in the following years.
“There’s a bit of supply availability at this point (for residential). I guess leasing also as this company grows and the balance sheet grows with it then we will be in a better position to be investing in leasing assets. But right now it’s better equipped to grow residential products,” the ALI executive explained.
For now, the Malaysian business accounts for a small chunk of the ALI business, contributing less than 5% to ALI’s bottom line according to Ms. Dy. The company is testing the waters for the Malaysian market in order to see how to proceed with its international expansion.
“We’re hoping it will also establish the model for international growth, not just in Malaysia but to really know how to work the local market through a platform… I think it helps us in terms of learning and knowing how to maneuver local markets but there are always unique situations in markets so you always have to be aware of that,” Ms. Dy said.
Meanwhile, Mr. Dy said the company remains on track to meet its P40-billion profit goal by 2020, noting ALI would have to book a 17% annual increase from 2018 to 2020 to reach the target.
“Given the continued economic growth in the country… We feel very positive that we will be able to continue to introduce new projects in the market that will bring us closer to achieving our target,” Mr. Dy said.
BONDS
ALI is currently offering P10-billion bonds with a 10-year tenor at 5.92% per annum, to support its P111-billion capital spending for 2018. The company noted that the bond offering is “quite innovative” given its repricing feature, which will prompt ALI to set another coupon rate by the end of five years.
“We priced off the five-year benchmark, and we were able to get a credit spread of 75 basis points leading to a coupon rate of 5.92%. That was very tight pricing,” ALI Chief Financial Officer Augusto Cesar D. Bengzon said during the media briefing.
Mr. Bengzon said the bond issuance is something that investors were looking for in lieu of rising interest rates.
“We were able to price and get a lower coupon rate by virtue of the fact that we priced off the five-year benchmark. As you know the 10-year benchmark is quite volatile… The differential is easily 100 basis points. So the advantage for ALI is we were able to lock in a lower coupon rate,” Mr. Bengzon explained.
The offer period for the bonds started this Monday and will end on Friday, with listing at the Philippine Dealing and Exchange Corp. set for April 27.
Shares in ALI gained P1.25 or 3.14% to close at P41 each at the Philippine Stock Exchange on Wednesday.

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