Ayala Land aims to raise P10B to P15B through local bond market

MANILA, Philippines—Property giant Ayala Land Inc. plans to tap the local bond market within this first semester to raise about a third of its P37-billion record capital spending budget for 2012.

In a press briefing late Wednesday, ALI president Antonino Aquino said the company was included to raise about P10 to P15 billion from a retail bond offering. Apart from these, he said ALI would continue offering the innovative “Homestarter” bonds program in 2012.

The property firm’s chief finance officer Jaime Ysmael added that ALI would issue longer term securities. “Seven to 10 years is the sweet spot that we’re looking at,” Ysmael said.

The capital expenditure plan for 2012 is much higher than the P30 billion spent in 2011, mostly on residential development and some land acquisition. The P37-billion budget for this year is for the completion of ongoing developments, new residential and leasing project launches, and new landbank acquisitions, which are intended to sustain the company’s growth trajectory over the coming years.

Ysmael said ALI might be able to mandate arrangers for the retail bond offering by next week.

About 56 percent of this year’s capex budget has been set for residential development although Ysmael noted that given pre-selling activities, the residential property business has been mostly self-funding.

For 2012, ALI is expecting continued demand for residential products and will thus launch about 24,800 units across all residential brands. In 2011, it brought additional 20,613 units to the property market.

“The residential market will continue to be buoyant this year. That’s our view. We believe that we’re in a much better position to play more actively in the residential space given the breadth of products that we have and geographic reach as result of our aggressive landbanking across the entire Philippines,” Ysmael said. “Part of that landbanking is really to continue positioning in other areas.”

Aquino said the “Homestarter” bond program would also continue in 2012 to cater to retail investors wishing to put up seed money to buy residential units.

Under such Ayala Land Homestarter Bond scheme, which aims to boost residential sales while allowing the company to raise fresh funds, investors are required to set aside at least P5,000 a month for the next three years, or a total of P180,000. At any time during the investment period, a bondholder may select an Ayala-developed property under various brands, such as the upscale Ayala Land Premier and the middle-income Alveo, or Avida property and apply the bond as payment.

Bond holders are given advance notice of newly launched properties being offered by Ayala Land and the option to acquire choice units. Should a buyer forego that option, cash plus interest on maturity date will be paid instead.

Originally posted at 08:35 pm | Thursday, February 16,  2012