Spurred by PH growth, Ayala Land set to spend record P130B

Property giant Ayala Land Inc. has earmarked a record capital spending budget of P130 billion this year, optimistic that the domestic economy would continue to favor the property industry.

To support revenue growth in the years ahead, ALI is prepared to launch P130 billion worth of new inventory in the property market this year.

“We are hopeful and feel very positive that the economy will continue to be supportive of the property industry and therefore allow us to continue to make progress on our 2020 plan,” ALI president Bernard Vincent Dy said in a briefing on Friday.

Five years ago, with just P11.7 billion in net income, ALI has set a goal of growing this to P40 billion by 2020. Such goal is now “within striking distance,” Dy said.

“To achieve that, we now have to grow (net profit) by 17 percent in 2019 and 2020, a little bit lower than the last five years but hopefully, if things go well, we’ll be able to exceed that,” Dy said.

ALI is set to top the record P110.1 billion in capital expenditures last year, of which 41 percent was spent on residential projects, 23 percent on commercial projects, 15 percent on land acquisition, 12 percent on the development of estates and 9 percent on investments.

Roughly 40 percent of the spending budget of P130 billion this year would still be for residential development while 20-25 percent would be for expanding the leasing portfolio, ALI chief financial officer Augusto Cesar Bengzon said. The balance would be for land acquisition, estate development and other projects.

On project launches, Dy said this would depend on how robust market demand would be.

He said ALI had set a guidance of only P100 billion worth of project launches last year but ended up bringing to the market P139.4 billion in new inventory, mostly residential and office space for sale. It launched 16,535 residential units last year.

ALI’s reservation sales, an indicator of how much revenues could grow in the coming years, reached P141.9 billion last year, 16 percent higher than the previous year. The company cited strong demand from local and overseas Filipinos, which accounted for 82 percent of total sales. Net booked sales grew 14 percent to P110.8 billion.

Despite the upsurge in local inflation last year, ALI continued to grow its business on strong domestic demand.

The bulk of ALI’s project launches in the pipeline would be in greater Metro Manila NCR, region IV-A or Calabarzon (Cavite, Laguna, Batangas, Rizal, Quezon) and about 10-20 percent would be in Visayas and Mindanao.

To partly fund this year’s record capital spending, Bengzon said management would seek approval from the board for another P50 billion worth of bonds for shelf registration.

“Our funding program for the year involves raising incremental debt of P15-P20 billion via a combination of bank debt and bond offering,” he said.

“We’re keeping leverage on track. We grow this company at a fairly significant rate but keep a balance sheet that is conservatively financed,” Dy said.

For every peso of equity, ALI had a debt of 85 centavos as of end-2018.