ALI sets record capex for 2018

Property giant Ayala Land Inc. has earmarked a record-high P111-billion capital spending this year, supporting the rollout of more real estate products as robust macroeconomic fundamentals are seen to keep the domestic property market buoyant in the years ahead.

This year, ALI plans to bring to the property market P125 billion worth of new real estate inventory, mostly residential units. This will be 41 percent higher than the product launches last year worth P88.8 billion, which was below the target of P100 billion.

ALI president Bernard Vincent Dy said the programmed capital spending this year would be “significantly higher historically than what we’ve been spending in the last four to five years.”

“That’s really an indication of the opportunities that we see as well as our optimism on what we see in the market,” Dy said.

The capital spending budget this year is 21.4 percent larger than actual outlays last year. ALI’s capital spending amounted to P91.4 billion last year for its aggressive expansion and completion of new projects. Of the amount, 48 percent was spent for residential developments, 29 percent for commercial leasing projects, and 23 percent for land acquisition and estates.

This year, ALI chief finance officer Augusto Bengzon said the bulk of 43 percent would still go to the residential business while the leasing segment, including mall, office and hotel-resort development, would get 31 percent. Land acquisition will get 12 percent and the balance will be for estate development.

To attain its 2020 goal of bringing annual net profit to P40 billion, ALI needs to grow by at least 17 percent a year, which Dy said was very viable given the favorable macroeconomic fundamentals.

Last year, ALI grew its net profit by 21 percent to P25.3 billion, beating market consensus.

Dy noted that household consumption remained robust in line with the growing economy while mortgage rates continued to hover near historical lows despite an uptick in benchmark rates. At the same time, he said the business process outsourcing (BPO) sector would continue to expand alongside the country’s growing tourism industry.

“Our platform for growth is there. Our landbank is now over 10,000 hectares in 55 growth centers and we now have 25 estates spread across the Philippines,” Dy said.

Of the P125-billion launches planned by ALI this year, P100 billion will consist of new residential projects while P25 billion will be leasing or investment assets, such as new shopping centers, hotels and offices.

About five new malls are expected to open this year, including One Boni High Street and another in Circuit Makati. These will add 280,000 square meters to ALI’s shopping mall portfolio.
To partly fund its record capital spending this year, Bengzon said ALI would tap the debt market. The budget requires P20 billion to be sourced from borrowings, half of which will likely be in the form of retail bonds while some will be from bilateral loan deals.

ALI still has a leeway to swiftly offer P18 billion in retail bonds under its shelf registration with the Securities and Exchange Commission. ALI also expects to undertake some refinancing deals to lengthen debt maturities.