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.

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