ALI eyes debt market to fund P66-B capex

By Neil Jerome C. Morales, The Philippine Star

Posted at Feb 15 2014 10:05 AM | Updated as of Feb 15 2014 06:05 PM

MANILA, Philippines - Property giant Ayala Land Inc. (ALI) is tapping the debt market as a major fund source for its P66-billion capital spending this year.

The property developer of the Ayala conglomerate is banking on high liquidity in the financial service sector for its fundraising program, a top company executive said.
“(Fundraising will be) still primarily through debts...we have debt capacity that we can utilize,” said ALI chief finance officer Jaime Ysmael.

ALI has already refinanced most of its debts, making the company comfortable in the current maturity profile and interest rates due to lenders, he said.

The real estate firm is allotting close to P70 billion for its capital expenditures this year to support landbanking and project developments.

In 2013, ALI spent P66 billion for its various projects, backed by a P12.2-billion overnight share sale in March, a P15-billion bond sale in August and a P6-billion bond offering in October.

“Given our pipeline of projects, we estimate that our capital spending will be similar in magnitude [for 2014],” Ysmael earlier said.

“Hopefully the high liquidity in the banking system will help mitigate any increase [in interest rates],” he said.
The Bangko Sentral ng Pilipinas has assured companies it has a wide range of toolkit to address any possible rate increases and make economic conditions still workable for everyone, Ysmael said.

ALI is primarily into the development of residential projects, lease of commercial and office space and sale of prime lots. The company is also beefing up its recurring income portfolio through new hotels, convenience stores, department stores, supermarkets and hospitals.

In January to September last year, ALI’s profits jumped 30 percent to P8.6 billion, mainly driven by the upbeat performance of its property development, commercial leasing and services businesses.

The property firm is wrapping up its 5-10-15 program, launched in 2009 amid the global financial crisis. It is a five-year plan ending in 2014 that aims to boost ALI’s net income to P10 billion and return on equity to 15 percent.