Ayala Land slashes 2020 capex budget, puts on hold new projects

Property giant Ayala Land Inc. (ALI) has scaled down its capital spending budget this year to P70 billion from P110 billion and put on hold new projects, investments and land banking deals to ensure ample liquidity amid the new coronavirus disease (COVID-19) pandemic.

ALI also agreed to waive about P2.6 billion worth of rent from tenants in its 32 shopping malls nationwide during the one-and-a-half-month enhanced community quarantine (ECQ) of Luzon and other key cities. All of the company’s malls have shut down during the ECQ except for supermarkets, pharmacies and clinics.

“Notwithstanding the challenges that the world is facing today, we remain optimistic on the long-term prospects as we continue to develop, innovate and build for our many stakeholders,” ALI chair Fernando Zobel de Ayala said during the company’s stockholders meeting held via videoconferencing on Wednesday.

ALI president Bernard Vincent Dy reported that more than 90 percent of offices in ALI’s portfolio remained operational, as these cater to the business process outsourcing (BPO) locators, while nine out of 11 hotels currently sustain limited operations to serve BPO employees. All of its resorts in El Nido, Palawan, have likewise suspended operations.

Many of ALI’s revenue-gene­rating businesses had been significantly affected by the ECQ that has paralyzed business since mid-March. This will affect the performance of the company this year, with some likely spillover effects in 2021, he said.

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.

To ensure that the company has ample liquidity, all ALI business units have been directed to review their existing plans and immediately implement “zero-based” budgeting, validate all costs and spending requirements and focus only on essential expenditures and critical projects, ALI chief financial officer Augusto Bengzon said. This included the rationalization of a number of potential investments and land acquisitions.

“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,” Bengzon said.

The P40-billion cut in capital spending budget to P70 billion is one of the bitter pills ALI has decided to swallow during this pandemic.