Ayala Land readies 3rd Homestarter Bond issue

MANILA, Philippines - Property giant Ayala Land Inc. (ALI) is readying a third tranche of its Homestarter Bond offering at a higher amount of up to P1 billion, fueled by strong investor demand.

Last month, ALI successfully raised P504 million from the second tranche of its Homestarter Bond issue which was fully oversubscribed.

“We are very pleased with the result and in response to that, we are lining a third tranche for our product launches next year. We hope to increase the size to a billion pesos given its success but this would be in consultation with our partner banks,” said ALI chief financial officer Jaime Ysmael on the sidelines of the Ayala Group sustainability summit held yesterday.

The third tranche of the bond offering is expected to take place in the first half next year, Ysmael said.

ALI initially raised P130 million in sales from the first tranche in November 2006. The strong demand for this type of product has encouraged the company to launch a second tranche where the bonds carry a fixed rate of five percent per annum and mature in three years.

The Homestarter Bond 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.

The novel financing scheme’s primary targets are mid-income individuals and couples who desire to own their dream homes.

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.

Meanwhile, Ysmael said the company’s third quarter performance was “definitely better” than the first two quarters on improving sales across its residential and office projects.

“It’s an upward trajectory but overall we are still down compared to last year. We can not reverse it right away, it takes a while. But at least quarter on quarter, trends are improving,” he said.

ALI reported a 35.7 percent drop in net income during the first half of the year, from P2.91 billion to P1.87 billion, due to lower revenues from its high-end residential projects and the absence of capital gains.

In the second quarter alone, the company posted a net profit of P964 million, down 10.74 percent as revenues declined 2.38 percent to P6.98 billion.

Moving forward, Ysmael said ALI is gearing up for a much better year in 2010 as it ramps up expansion. “We are gearing up for a much higher level of activity next year. We feel that demand will be there for residential. The interest rate will remain favorable for the housing market,” he said.