Property giant Ayala Land Inc. plans to raise P5 billion from a fresh offering of five-year local bonds, proceeds from which will fund the construction of new urban projects.
This will be the second issuance in relation to ALI’s up to P50 billion three-year securities program.
This will be underwritten by China Bank Capital.
Proceeds will be mainly used to partially finance general corporate requirements and construct new projects such as a new business process outsourcing hub and a new Seda Hotel along Manila Bay, Ayala Triangle Garden Tower Two in Makati, and Central Bloc in Cebu.
The bonds secured a triple-A “PRS Aaa” credit rating from local creditwatcher Philippine Rating Services Corp., suggesting that the upcoming securities are of “highest quality with minimal credit risk.”
PRS Aaa is the highest rating assigned by PhilRatings. The rating outlook is stable, which means it will likely be unchanged in the next 12 months.
In a statement, Ayala Land said the ratings—which were also maintained for all outstanding rated debt—were assigned given the following key considerations:
a well-diversified portfolio with a sizable and strategic landbank for future expansion, complemented by solid brand equity and a highly experienced management team;
sustained healthy outlook for the economy and real estate industry;
continuously growing profitability, coupled with healthy cash flow generation and high cash reserves; and,
sound capitalization, with a manageable debt level and mix.
ALI, one of the largest real estate conglomerates in the Philippines, also plans to raise as much as $300 million from its maiden offering of real estate investment trust (REIT) shares as early as this yearend, potentially the first public offering of this new asset class in the country.
The plan is to infuse $500 million worth of assets with steady recurring revenues into the REIT and sell down two-thirds of this entity to the public.
REIT gives investors the option to invest directly in the finished products that are already earning money—such as residential and office units, hotels or shopping malls or even infrastructure ventures like toll roads and power plants—and not just the property developer itself.
This is meant to attract investors because the Philippine REIT law of 2009 requires the distribution of 90 percent of income annually.
ALI plans to infuse two Makati commercial assets into the proposed REIT.
One is the newly built two-tower office complex Ayala North Exchange, which has a gross leasable area of around 56,000 square meters.
These office towers are specially designed for both multinational and business process outsourcing companies. —DORIS DUMLAO-ABADILLA