ALI capex hits record P33 billion

MANILA, Philippines -  Property giant Ayala Land, Inc. is firing on all cylinders and gearing up for an aggressive expansion with capital spending expected to hit an all-time high of P33 billion this year.

In a briefing with reporters Friday, Ayala Land chief finance officer Jaime Ysmael said the programmed capital budget is 65 percent higher than the P20 billion spent in 2010 and the highest level of investment spending by the company, reflecting rising confidence in the pace of economic recovery.

Ysmael said the bulk of expenditure or 46 percent would still go to residential development while the leasing business which covers shopping malls and office buildings will get 27 percent of this year’s budget. Around 11 percent will go to land banking activities and the remaining six percent will be used to further expand the group’s hotel portfolio.

He said funding will come from debt and equity. “There will be borrowing at subsidiary levels,” he said.

Antonino T. Aquino, president of Ayala Land, said the company remains upbeat about its prospects this year and expects to sustain its upward trajectory. “We have put in place a program that will ensure long-term continued growth for the company,” he said.

For this year, ALI is ramping up residential construction as it doubles sales to over 20,000 units across all its brands, worth around P57 billion. In terms of value, this year’s expected sales would be 72 percent higher than the P33.14 billion recorded in 2010.

The company’s four residential brands launched a total of 10,115 units in 2010, more than three times the number launched the previous year.

Ysmael said the company will fasttrack the development of economic housing units under subsidiary Amaia land, which is expected to become the group’s biggest residential brand in the next five years in unit sales and profitability because of the big demand in the segment.

Of the 20,000 units to be launched this year, 10,000 will come from Amaia while the balance will be spread across other brands, which include Aveo, Avida and Ayala Land Premier (ALP).

Aveo and Avida cater to the middle-income and affordable segments while ALP serves the high-end market.

For its retail business, ALI will launch a total of 7 new projects in and outside Metro Manila that will provide a combined gross leasable area of 172,000 square meters.  Slated for opening this year are Abreeza Mall in Davao and Harbor Point in Subic.

ALI will continue to grow its BPO portfolio with the construction of additional 200,000 sqm of GLA.  It will also start the operation of five new BPO buildings in Baguio, NUVALI, Iloilo, Bacolod and Cebu totaling 55,000 sqm of GLA.  The company expects to have a total of 720,000 sqm GLA by 2014.

With the annual office demand at 300,000 sqm based on Jones Lang LaSalle Leechiu’s estimates, the planned new supply can be easily taken up by the market.

For its hotel operations, ALI will break ground on two businessman hotels in Bonifacio Global City and Davao.  The group will also build the first Holiday Inn & Suites in Manila on top of a redeveloped Glorietta Mall in Ayala Center.  The 347-room Holiday Inn, which will be the second Holiday Inn branded property in the country, is targeted to open its doors by 2013.

ALI posted a record net income of P5. 46 billion last year, up 35 percent from P4.04 billion in 2010 on robust sales across all business segments. In the fourth quarter, ALI recorded its highest core quarterly earnings at P1.52 billion, making it the seventh consecutive quarter of positive earnings growth for the property giant.

ERRATUM: Ayala Land’s 2010 net income was P5.46 billion and not P4.04 billion as erroneously published last Sunday.  Our apologies for the oversight.