Ayala Land to hike capex for 2014

By: Krista Angela M. Montealegre, InterAksyon.com October 10, 2013 4:33 PM


MANILA – Ayala Land Inc (ALI) will increase its capital expenditure for next year to support more project launches, as the real estate giant hits its earnings target ahead of schedule.
Jaime Ysmael, ALI chief financial officer, today told reporters that the higher capex will finance the development of residential projects and support the expansion of its property portfolio, which includes malls, offices, hotels and resorts.

"Naturally that number has to move up for as long as we continue to invest heavily," Ysmael said on the sidelines of the listing ceremony of ALI's P6-billion bonds at the Philippine Dealing and Exchange Corporation.

ALI this year earmarked P65.5 billion for its capex, P46 billion of which will bankroll the completion of ongoing projects. It will also launch 69 new projects with a combined value of P129 billion.
To finance its 2014 capex, the property firm will return to the debt market next year with a bond issuance, the company's "preferred mode of raising funds."

"At the rate we're developing, even our prognosis of the property market, we believe the runway is still long enough for us to take advantage of. Now we have more land across many geographies, plus a more complete product offering spanning all income segments,"

Ysmael said.
He said ALI sustained its growth momentum in the third quarter despite the blast that rocked Two Serendra in May, considered a "non-event" in the company's performance.

"The take-up of projects remains to be very buoyant. Other markets are quite good as well," Ysmael said, referring to the mall, office and hotel businesses.

ALI will meet its target to post a net income of P10 billion this year, a year ahead of its commitment, he said.
"We're almost there...that should be achieved within the year," Ysmael said. However, the goal to raise return on equity to 15 percent will "take a bit more time" to achieve after the property company sold shares in the last two years.

Last year, ALI hit record profits of P9.04 billion, 27 percent higher than the P7.14 billion recorded the previous year. At end-June, the real estate giant's earnings jumped 30 percent to P5.62 billion from P4.33 billion last year.

The company is on the penultimate year of its 5-10-15 plan, launched in 2009 with the world economy still reeling from the effects of the global financial crisis.

Land reclamation 'interesting' area
When asked if it will submit a competing proposal on SM's plan to reclaim and develop land from Manila Bay, Ysmael said that has been an "interesting" area for ALI even in the past.

"There are some challenges there for reclaimed land so we have to make sure we are comfortable with the regulatory environment. As you know, iba yung reclaimed land. It's a patrimony of the state. There are some issues that we have to be comfortable with," he said.

SM Land Inc recently submitted an unsolicited proposal to the Pasay City Public-Private Partnership Committee for a joint venture that would reclaim and develop 300 hectares of land from Manila Bay.
Pasay City is seeking competing proposals from companies until November 4.