Ayala Land cuts capital outlays by P40B, waives P2.6B mall rent
L-R top to bottom: ALI vice-chair Jaime Augusto Zobel de Ayala, chair Fernando Zobel de Ayala, president Bernard Vincent Dy, chief financial officer Augusto Bengzon at the ALI 2020 stockholders meeting via Zoom
Property giant Ayala Land Inc. has slashed its capital spending budget this year to P70 billion from P110 billion, shelving new projects, investments and landbanking deals to ensure ample liquidity during the COVID-19 pandemic.
ALI also agreed to waive about P2.6 billion worth of rent from shopping mall tenants during the 1.5-month enhanced community quarantine (ECQ) of Luzon and other key cities. Its malls have been shut down since mid-March to comply with the ECQ, except for supermarkets, pharmacies and clinics.
During the company’s stockholders meeting on Wednesday, however, ALI president Bernard Vincent Dy expressed confidence that the company would weather the COVID-19 pandemic. He added that the group was now preparing to restart businesses post-ECQ.
More than 90 percent of ALI’s offices in its portfolio remain operational, as these cater to ECQ-exempt business process outsourcing (BPO) sector, while nine out of 11 hotels maintain limited operations to serve BPO employees to date, Dy reported. On the other hand, all of ALI’s resorts in El Nido, Palawan have suspended operations.
Since many of ALI’s revenue-generating businesses have been significantly affected by the ECQ, Dy said this would gnaw on the performance of the company this 2020, with some likely spillover effect in 2021.
Apart from the waiver of shopping mall rent, ALI has also earmarked P600 million to assist no-work-no-pay workers in its eco-system.
“We have also decided not to launch any new project this year. We believe that we have sufficient projects in our development pipeline to sell once the situation normalizes given that we have launched P159 billion worth of projects just last year,” ALI chief financial officer Augusto Bengzon said.
Bengzon said the reduction in capital spending to P70 billion would ensure that the company would remain in a strong financial position throughout the COVID-19 crisis.
All business units have been directed to review their existing business plans to immediately implement a zero-based budgeting program and to validate all costs and spending requirements, focusing only on the most essential and critical projects.
Other highlights of ALI’s stockholders meeting are as follows:
– ALI revised cash flow projection to take into account possible slowdown in residential sales, the rent concessions to mall tenants and the significantly low occupancy of hotels and resorts but net cash flow from operations is still seen more than sufficient to cover lower capital outlays;
– ALI plans to issue two-year bond in early June, in line with a new cash flow budget that seeks to pay out a portion of outstanding debt obligations this
year, bringing it to a level at par with, if not lower, than 2019 debt levels; and,
– ALI is on track with its goal to be carbon-neutral by 2022.
