MANILA, Philippines - Weighed down by lower real estate sales and interest income, property giant Ayala Land Inc. (ALI) reported a 16 percent drop in net income last year to P4.04 billion from P4.8 billion in 2008.
In a financial report submitted to securities regulators, ALI said consolidated revenues declined 9.8 percent to P30.45 billion largely due to an eight percent decrease in revenues from real estate and hotel operations and the absence of capital gains from a large transaction, specifically the sale of the Valero lots in March 2008.
Revenues from real estate operations slid 8.4 percent to P26.84 billion while the hotel division registered revenues of P1.23 billion, down from P1.32 billion a year earlier.
In the fourth quarter of 2009, however, ALI’s net earnings rose seven percent to P1.12 billion, mainly due to a combination of relatively stable operating revenues from key business segments and effective cost control measures.
“While 2009 was certainly a very challenging year, the strategies we put in motion were sound and we managed to end the year strong,” said Jaime Ysmael, ALI senior vice president and chief finance officer.
Despite the lower consolidated revenues, consolidated net operating income (NOI) reached P9.03 billion in 2009, declining by only three percent from P9.33 billion posted the previous year. This clearly reflected the overall improvement in blended NOI margins to 32 percent in 2009 from 30 percent the previous year.
Shopping centers and corporate business margins stabilized as leased-out rates in new malls and business process outsourcing (BPO) office buildings steadily moved up, while an improvement in strategic landbank management margins offset the decline in residential and support businesses margins which were hampered by high input costs at the start of the year.
Residential development revenues amounted to 14.23 billion in 2009, six percent lower than the 15.22 billion posted the previous year, as the combined value of bookings for the three brands dropped due to uncertain market conditions in the first quarter of 2009 and a limited supply of new product launches for the year.
“We see that the market recovery is well underway and thus we will be very aggressive in our project launches this year, with over 9,200 units planned for launch from 28 projects across all residential brands,” said Rex Mendoza, ALI senior vice president and chief marketing and sales officer.
Ayala Land Premier, which caters to the high-end residential segment, successfully launched two projects in January –Santierra, a 77-hectare development in the company’s Nuvali township in Laguna, and Park Terraces – a multi-tower residential condominium in Ayala Center. Record opening weekends were seen for both projects, where the company grossed almost one billion in sales of 92 Santierra lots and a record over three billion in sales of Park Terraces units. Sales for both projects continue to be strong with 370 units available for the first Park Terraces tower already 90 percent sold in the first month.
Total revenues for shopping centers rose four percent to 4.44 billion in 2009 as its gross leasable area (GLA) portfolio increased with the opening of MarQuee Mall in Angeles, Pampanga last September 2009. Blended occupancy rates remained at 92 percent despite the Ayala Center redevelopment related closures in Glorietta 1 as well as the start-up operations of MarQuee Mall.
Revenues from corporate business nearly doubled to P.99 billion in 2009 from P1.09 billion the previous year. The growth was derived largely from the expansion of the BPO office portfolio. Revenues were also boosted by higher average BPO lease rates with the start of operations of two higher-yielding BPO office buildings in Makati in 2009 (Solaris One and Glorietta 5 BPO). Meanwhile, the performance of the headquarter-type (HQ) office buildings continued to be positive. Average lease rates for the HQ buildings increased by four percent on programmed rental escalations as well as above-average renewal rental rates, with occupancy rates remaining high at 96 percent.
Revenues from the Strategic Landbank Management Group (SLMG) amounted to 2.26 billion in 2009, 24 percent higher than the previous year, largely due to the significant construction completion of its share in booked Nuvali residential and commercial lot sales.