Wednesday, November 10, 2010

Ayala trims number of residential units for sale

MANILA, Philippines - Property giant Ayala Land, Inc. will fall short of the target number of residential units to be launched this year because of delays in paperwork, an executive said.
The property arm of the Ayala group, however, is taking a look at fund-raising options to bankroll capital spending to sustain growth next year.
Instead of the target 11,600 units, Ayala Land will launch “a little less than 11,000 because of timing issues,” Jaime E. Ysmael, Ayala Land senior vice-president and chief finance officer, told reporters late on Tuesday.
“But it is still an aggressive launch,” he added.
Mr. Ysmael said segments Alveo and Avida were affected by the delays.
The target is more than 5 times the 2,200 units launched last year and more than double the recent 5-year average of 4,500 units per year.
The property firm initially aimed to start selling 9,275 units early this year. This was hiked to 11,600 in the middle of the year.
Ayala Land operates under four major brands -- Ayala Land Premier for the high-end segment, Alveo Land for the middle-income segment, Avida Land for the “affordable” market, and Amaia Land for economic housing.
Mr. Ysmael said growth in the fourth quarter would be led by Ayala Land’s mall business. “There are indications that [the growth momentum] will be sustained. In the last quarter, mall spending is higher because of holiday spending.”
Fewer spaces for lease because of the renovation of the Glorietta 1 mall in Makati, which will reopen in the second half of 2012, will be offset by improved operations of Glorietta 5 and Greenbelt 5 in Makati and the Marquee Mall in Pampanga, he said.
Higher sales across all business units allowed the property giant to post a 35% increase in net income to P3.94 billion in the nine months that ended in September.
“Lease rates go up because of escalation in contracts. New contracts are back to 2008 levels before the industry had a challenging period in 2009,” Alfonso Javier D. Reyes, head of investor relations at Ayala Land, told reporters.
The property giant is looking at selling peso-denominated bonds to raise funds for next year. “There is demand for peso-denominated instrument given the strength of peso,” Mr. Ysmael said.
Meanwhile, the company’s residential project in China will start this month.
“This project is purely residential but we have the option of participating in other developments, which includes retail, within the complex,” Mr. Ysmael said.
“Construction will commence this month. There will be 11 towers in the first phase ... then eight in the second phase,” Mr. Ysmael said. There will be 50 to 60 units per building.
In August, Ayala Land signed a deal with Sino-Singaporean Tianjin Eco-City Investment and Development Co. Ltd. for one of the first developments in the 3,000-hectare Tianjin Eco-City project in China.
The partners will develop more than 1,100 units within a 19-tower residential complex on a 9.78-hectare property in Tianjin Eco-City.
“We are looking at learning from the process, and mobilizing people and access to the supplier base,” he said.
Ayala Land also said it was looking at a mixture of malls and office buildings for its foray into real estate investment trusts or REITs. Malls to be included have stable earnings like Greenbelt in Makati, Alabang Town Center in Muntinlupa, TriNoma in Quezon City, and Market! Market! in Taguig.
Shares in Ayala Land fell by 1.05% or P0.18 to P17.00 each yesterday.

Vista Land profits up on strong property sales

MANILA, Philippines - High residential sales boosted Villar-led Vista Land and Lifescapes Inc.'s earnings for the first 9 months of the year.
Based on the company's financial filing, it recorded a net income of P2.16 billion for January to September 2010, up 35.8% from P1.59 billion in the same period last year.
Real estate revenues rose 13.9% to P8.2 billion from P7.2 billion.
The firm said it may exceed its full-year targets of P2.8 billion income and approximately P20 billion sales.
"... General consensus [is] that consumer confidence remains strong," said Vista Land Senior Vice President for Finance Ricardo Tan Jr.
"We should comfortably exceed our sales target for the year by just repeating our 3rd quarter performance," he added.
Vista Land is the holding company of 5 real estate brands, namely Brittany, Crown Asia, Camella Homes, Communities Philippines and Vista Residences.
It launched 30 projects worth P19 billion for the first 9 months and these are mostly in areas outside Mega Manila.
Its capital expenditures for 2010 was set at P10.2 billion.
"We remain optimistic about the outlook for the property sector in general and are confident that will continue to be a dominant force in the affordable housing market where demand has been stable," Tan said.

Exports climb 46.1% in September

MANILA, Philippines - Exports continued to post strong double-digit growth in September, buoyed by a surge in demand for the country's electronic products.
Data from the National Statistics Office showed the total export bill climbed 46.1% to $5.314 billion in September from last year's level of $3.638 billion, beating August's 37% growth.
Month on month, exports rose 11.7% from the $4.758 billion posted in August.
Meanwhile, aggregate merchandise exports for the period January to September 2010 increased by 38.5% to $38.298 billion from $27.649 billion registered during the same period in 2009.
Electronic products, the country's main export item with a share of 65.5% of the total bill, surged by 54.6% to $3.478 billion from last year's $2.250 billion.
Singapore was the Philippines' top market, accounting for 24.2% of the total exports at $1.283 billion.
Japan came in second, with $765.85 million, followed by China ($669.74 million), US ($558.68 million), and Hong Kong ($383.99 million).
The government expects exports to climb 15% this year, and imports are forecast to increase 20%.
The electronics industry group, meanwhile, expects its exports to climb by 25% to 30% this year.
As demand from the country's trading partners continues to improve alongside with the global economy, the government is confident it can beat its growth targets this year.

Air France-KLM targets ‘discriminatory’ airline taxes in RP

MANILA, Philippines - European carrier Air France-KLM has elevated its complaints against the Philippines’ "discriminatory" taxes on foreign airlines to the government level, hoping bilateral talks along with planned lobbying in Congress will resolve the matter, ranking executives said on Tuesday.
This tack is being pursued instead of an outright filing of a dispute case at the World Trade Organization which is still a "subject of discussion," said Marnix H. Fruitema, senior vice-president for Asia Pacific at KLM Royal Dutch Airlines.
In the meantime, the company may reconsider operations here as profit margins are being wiped out by the country’s common carrier tax and gross Philippine billings tax, said Cees Ursem, KLM’s general manager for the South China sea division.
"Our governments are fully aware. We have our governments talk with the Philippines," Mr. Ursem said in an interview, referring to the ongoing tax dispute.
Under the National Internal Revenue Code, international air carriers must pay a 5.5% tax on revenues broken down as a 3% common carrier tax on their gross receipts and a 2.5% tax on all cargo and passenger revenues "originating from the Philippines in an uninterrupted flight, irrespective of the place of sale or issue...of the ticket."
The Tourism department itself has noted that this tax policy is unique to the Philippines.
KLM is the only remaining carrier that flies direct between Manila and Europe. It celebrates its 60th anniversary in the Philippines next year.
"And a number of congressmen are aware of this. We will look for support within Congress and Senate. The government is aware we don’t have such a long time," Mr. Ursem added.
"We have the fullest confidence it (the tax issue) will come in order," Mr. Fruitema said.
Batangas Rep. Hermilando I. Mandanas (2nd district), chairman of the House of Representatives ways and means committee, could not be immediately reached for comment. But he had earlier said he would file a bill to address foreign airlines’ concern on this matter.
For now, complying with Philippine tax laws has meant the carrier has enjoyed little to no margins from its operations here, the officials claimed.
"The margin in our industry in the good years is 5%-7%. If you have to pay 5.5% tax, what you earn is gone. You might as well close shop," Mr. Fruitema said.
The picture is worse, said Mr. Ursem, as the profit margin for Philippine operations is "negative," with other regional flights subsidizing costs here.
The carrier’s revenues from the Philippines are expected to flatten this year from 2009, in contrast to the 20% growth expected from its Asia-Pacific operations, the officials said.
"We can’t say definitely [we will stay here]. We will take [the tax issue] step by step with fullest confidence it will be solved soon. If it continues like this, we will reconsider," Mr. Fruitema said.
It is keen on resolving the issue and remain in the Philippines, however, as the company enjoys a niche of having the only "nonstop product to Europe," he said.
"[Connecting flights] is not the idea for Manila. I’m not sure the customer will like it," he said.
"We play a major role in the economy... and we would love to expand that role."

Clinton, Aquino talk about anti-poverty programs

Clinton doesn't disappoint Manila audience
MANILA, Philippines (3rd UPDATE) - Former US President Bill Clinton paid a courtesy call on President Benigno Aquino III on Wednesday and expressed his support for the Philippine government's various programs, particularly on anti-poverty.
The "social call" happened past 3 p.m. at the Premier Guest House inside the Malacañang compound. The meeting was also attended by several Cabinet members, including Finance Secretary Cesar Purisima, Health Secretary Enrique Ona, and Presidential Management Staff chief Julia Abad.
"The discussions were casual, they were very friendly, and they focused primarily on anti-poverty programs of the Philippine government," Presidential Communications Development and Strategic Planning Secretary Ricky Carandang told ANC's Top Story.
Carandang noted that the former US president was most interested about the Philippine government's efforts in alleviating poverty, which is also at the core of programs carried out by an organization he set up in 2005.
The Clinton Global Initiative is a non-partisan organization that convenes global leaders to devise and implement solutions to the world's most pressing problems.
Carandang said President Aquino shared with Clinton his plans to expand the Conditional Cash Transfer (CCT) program from 1 to 2.3 million households, and several long-term investments in education and healthcare.
"President Clinton said the CCT was a good idea and it's been known to work in other countries and he said he supports that program," he said.
Rice, energy
Aside from anti-poverty efforts, Clinton and Aquino also discussed the Philippines' rice self-sufficiency goals, and plans to build new capacities in the power sector.
"President Clinton seemed to be interested in the Philippines' rice production. He is also particularly interested in geothermal power because it's a renewable energy source."
Carandang noted that the discusssions were "general," and "no specific thing [was laid] on the table because it was just a courtesy call."
President Aquino earlier said Clinton's visit was a vote of confidence for the Philippines despite supposed terror threats.
Last September, Aquino met Clinton's wife, US Secretary of State Hillary Clinton, during the signing of the $434-million Millennium Challenge Corporation (MCC) grant in New York.
The MCC grant would fund infrastructure and rural development programs in the Philippines to reduce poverty and spur economic growth.
On a lighter note, Carandang said Clinton asked for a Diet Coke during the meeting. President Aquino is known to be fond of regular Coke.
Praises PNoy, GMA, Ramos
In his speaking engagement at the Manila Hotel, Clinton said President Aquino possesses the qualities of a good leader, and though he had met him only briefly, he said he saw that Aquino has a clear idea of where to take the country and the energy behind it.
Clinton also praised the two former presidents in attendance, Pampanga Rep. Gloria Arroyo and former President Fidel Ramos. He made special mention of the corporate social responsibility bill filed by Arroyo in Congress.
Clinton said he sees the Philippines finally reaching its potential if only there was a relentless focus on the future, and if there was a capacity to abandon grievances the way Rwanda in Africa had done despite its harrowing past.
He also acknowledged that the colonization of the Philippines by Spain and the US has not been good for the Philippines.
He praised the Philippines' effort to maximize domestic sources of energy, and singled out the country's development of geothermal energy as something other countries can emulate.
Sustainable growth, light moments
Clinton also spoke about the need to change the world's economic way of life, and predicted how the 21st century could be the most progressive and excited period in history if there is a common effort to minimize the negatives.
He also warned of calamitous prospects if the world continued to cling to the past, citing the need to minimize the generation of greenhouse gases.
Clinton had several light moments in the question and answer portion, saying the vast power he once possessed made him realize he wasn't quite as smart as he thought he was.
He also joked he was free to speak his mind now and be much more open. But, he added, not much people pay attention to what he says until he says something that may be embarrassing to his wife, now US Secretary of State Hillary Clinton, and, her boss, US President Barack Obama.
Clinton doesn't disappoint
Clinton did not disappoint those who paid between P10,000 to P25,000 each for tickets just to listen to his speech at the Manila Hotel.
Big names in politics and showbiz gathered for a once-in-a lifetime opportunity to learn from one of the most powerful leaders the United States has offered the world.
One of Clinton’s most striking messages, according to former Senator Richard Gordon, was when the former US President mentioned how leaders should treat power, money, and responsibility they have.
"One of his most powerful messages was about the powerful leaders who should use their power with humility," he said.
Sen. Loren Legarda shared the same sentiment. She said: "He says it's not all about power but it's about quality of service. Ito ang malaking naging pagkukulang hindi lang sa Pilipinas kung hindi sa buong mundo, na ang power ay panandalian lamang."
Neophyte Cavite Rep. Lani Mercado, for her part, said she was awakened upon hearing the words from formerly the most powerful man in the world.
“Sabi niya hindi dapat power hungry, iniiisip dapat na we are hired by our constitutents," she said. For others, it was not the message about politics that struck them the most.
Sen. Pia Cayetano said she can’t forget the story of Clinton putting up his own foundation to bring the cost of medicine down to an affordable level, especially to a developing country like the Philippines.
"Nababaan presyo ng gamot para mas marami ang makinabanag, yan ang pinakamagandang sinabi niya," she said.
TV personalities impressed, too
Even showbiz personalities were impressed by how Clinton discussed the issue of governance and social responsibility under a single theme.
“Mr. Pure Energy” Gary Valenciano said he thought he would be listening to a pure political discussion but Clinton proved him wrong.
Valenciano said: "He kept on stressing, look at the future, forget about the past… that's a hindrance to a lot of people, to society itself."
TV host Johnny Litton was also all praises for the former US President. "The approach was beyond presidency, it's continuation of his belief even if he is not anymore the most powerful president in the world,” Litton said.
Despite the tone of Clinton's speech as more of making politicians realize their ineptness and lack of humanity in serving a developing country, US Ambassador Harry Thomas said the former President saw what is good in President Benigno Aquino III when they met at Malacañang Palace.
"He enjoyed how the President Aquino wants to do things, the president's energy, and how he is taking care of his job," Thomas said.