SEC okays 2nd tranche of Ayala Land Homestarter bond offer

MANILA, Philippines - The Securities and Exchange Commission (SEC) has approved the plan of property giant Ayala Land Inc. (ALI) to launch the second tranche of its Homestarter bond offering, worth up to P504 million.

ALI said the Homestarter bonds carry a fixed rate of five percent per annum and would mature in three years. The bonds will be issued from Sept. 28 to Oct. 9.

The Homestarter program aims to encourage low to middle-income families to save funds to be able to buy properties in the future. It gives prospective investors a chance to earn a yield significantly higher than those paid by traditional savings and time deposit accounts.

Rex Mendoza, ALI senior vice president, said the novel financing scheme’s primary targets are mid-income individuals and couples who desire to own their dream home.

Under the program, buyers can set aside as low as P5,000 a month for a bond subscription over 36 months. The resulting P180,000 will earn five percent a year.

BPI Capital Corp. has been named as underwriter and issue manager.

ALI vice-president and treasurer Augusto Bengzon said the bonds will even earn an additional 10 percent bonus credit when applied as downpayment to a property developed by the company and its subsidiaries Ayala Land Premier, Alveo and Avida, but subject to a maximum of five percent of the net selling price of the property chosen by the buyer.

Bengzon reported that the Homestarter Bond was first launched three years ago to help buyers save for a dream home one month at a time. He related that of the P169 million worth of bonds issued on March 2006, a total of P125 million worth of ALI properties were subsequently purchased. 

 “We achieved our objectives and now hope to attract a larger number of homebuyers and investors,” he said.

“Through the Homestarter bond, we hope to create a captive market for future sales of our brands,” Bengzon said.

An added enhancement of the current offering is that buyers are not subject to a limit on the number of bonds that they can invest in.

At any time during the three-year investment period, a bondholder may select any property owned and developed by the Ayala Group and apply the bond as payment. Another enhancement to this issuance is the added benefit of receiving advance notice of newly launched properties being offered by Ali’s residential brands and the option to acquire choice units.

Should the buyer forego that option, he or she will receive cash plus interest on maturity date. Should an investor be unable to continue his monthly payments during the three-year period, his subscription will be terminated without interest and all his contributions returned without penalties.

“This is definitely a win-win investment. Very few institutions with a solid financial standing will pay five percent a year interest on only P5,000 a month, and cash is not even up front. On top of that, an additional 10 percent bonus credit is given on the principal if converted to a real estate property from Ayala Land. And, you’ll even have the backing of Ayala Land Inc., a Triple A company,” Mendoza said.

For this year, ALI said it is planning to launch 2,000 residential units.