ALI maps out new growth plans to double income

MANILA, Philippines - Property giant Ayala Land Inc. has mapped out a new growth plan through 2014 that will involve (ALI) 46 projects in 17 targeted key growth centers across the country, its foray into the boutique hotel or condotel business, and the rollout of community and neighborhood malls, as it aims to double its net income over the next five years.

Speaking to shareholders during the company’s annual stockholders meeting yesterday, ALI chairman Fernando Zobel de Ayala said 2009 was a transitional year for the company, allowing it to implement an aggressive five-year strategic plan designed to take the firm to greater heights as it enters a new property cycle.

Zobel said the property giant is seeking to achieve a 15-percent return on equity within five years, more than double the eight percent registered in 2009.

“It is estimated that more than half of the $17.3 billion in remittance flows received in 2009 will end up having a positive impact on the real estate industry, either being spent directly on residential purchases or property supporting industries such as retail,” Zobel said.

With stable overseas Filipino remittances, strong consumption patterns and strengthening demand for BPO office space, the company is seeking to aggressively grow its traditional products in more locations across the country while introducing new products that cater to a broader base, said ALI president and chief executive officer Antonino T. Aquino.

He said the group will be launching an owned and managed boutique hotel business line with at least five already being planned for construction this year. “This new product is expected to cater to discriminating but increasingly value-driven business travelers and tourists – a market which has grown significantly over the last decade. Over the medium to long term, a condotel model will also be unveiled to diversify the group’s hotel and serviced apartment operations and will be a key feature of the company’s tourism-related ventures,” she said.

In the retail segment, on top of continuing the expansion of regional malls, the group will enter into smaller formats known as community and neighborhood centers, to tap a broader consumer segment and address increasing customer sophistication and preference for convenience. The first of the six planned for launch this year will be rolled out in Cavite.

Ma. Victoria E. Añonuevo, senior vice-president and group head of the Ayala Malls Group, said around P6 billion is being budgeted for six small retail centers to rise in Cagayan de Oro, Baguio, Cavite, Bacolod and Iloilo.

Community centers will have a retail footprint of 10,000-20,000 square meters of gross leasable area (GLA) and are going to be located within easy accessibility of a large residential or commercial area. 

Neighborhood centers, meanwhile,will be even smaller with a GLA of 10,000 square meters or less offering the same basic conveniences as community centers but in a much more compact format.

With demand for BPO space on the uptrend again with industry revenues expected to grow to at least 25 percent this year, ALI is pursuing its expansion outside Mega Manila where higher cost efficiencies can be generated.

Anonuevo said the group is now fast tracking plans and in the process of entering into negotiations for future BPO sites in Iloilo, Cagayan de Oro, Subic and Cavite to prepare for the second wave of its BPO rollout program which is expected to boost ALI’s current market share.

ALI chief finance officer Jaime Ysmael said funding for its P27.2 billion capex this year will come from internally-generated funds and possible borrowings.

A planned listing of real estate investment trust (REIT), amounting to $300 million, is being planned for the second half of the year as soon as the implementing rules and regulations for the REITs are finalized and implemented, Ysmael said.

“This new capital market development initiative will provide a tremendous opportunity for our leesing businesses to publicly list stable earning investment properties, effectively allowing us to recycle capital and grow our business faster,” he added.

While meeting twin goals of retaining enough cash for ongoing funding needs and improving total shareholder return for its investors, the group is hoping to improve its dividend payout from 16 percent in 2009 to 30 percent of prior year’s net income in 2010 and this is expected to increase steadily to 50 percent by 2014.

“We will continue to do everything that we can to ensure that the company’s stock price will be reflective of improving fundamental performance and we will likewise be focused on the need to meet our shareholders’ dividend expectations,” Zobel said.