Ayala Land to tap bond market to fund projects

Posted at 01/17/13 8:32 AM

MANILA, Philippines - Property giant Ayala Land Inc. (ALI) will tap the bond market this year to jumpstart the development of large parcels of land acquired recently.

This will allow the company to cater to the expectations of continuous robust property demand in different market segments, a ranking company official said.

“Definitely at the ALI level, the parent company level, we will be tapping the capital markets. Bonds primarily,” ALI chief finance officer Jaime Ysmael told reporters.

ALI has yet to finalize the terms and issue size of the bond sale pending full-year 2012 performance data, he said.

“At the rate we are going, there will be some funding requirements because capital spending is continuous especially now that we have a lot more projects,” Ysmael said.

Philippine companies have been tapping funds from different channels like bonds and banks amid low interest rates and high liquidity.

Bulk of the borrowed funds will be used to start and complete the construction of numerous condominium units, shopping malls and hotels as opposed to the landbanking focus last year, Ysmael said.

Potential share sales, for its part, will depend on market condition and funding needs, Ysmael said.

For project development, ALI will be busy starting construction in large parcels of land recently acquired.

“We will focus on the ones we acquired last year. Food Terminal Inc. (FTI) is one of them definitely and also Circuit Makati,” Ysmael said.

“We will focus on the big parcels in trying to accelerate the development and monetize them as soon as possible,” he added.

Last year was a busy year for the property giant particularly in terms of securing prime, large chunks of land.

For instance, the firm won the bidding for the 74-hectare FTI complex in Taguig with its P24.3-billion offer.

Also last year, ALI’s middle-income housing unit Avida Land Corp. signed a deal to develop the Gatchalian family’s 60-hectare Plastic City property in Valenzuela City, which formerly housed the country’s biggest fully-integrated plastic manufacturing plant.

Ysmael said the master plan for the mixed-use development of FTI is already complete.

“We already filed our license to sell and we already got it so we should be starting to sell soon. Initially commercial lots,” Ysmael said, adding that the residential segment will be marketed by upper market brands Alveo and Ayala Land Premier.

Ysmael said Avida already started its development in Plastic City while ground works for the 6.6-hectare former Nestlé factory in Muntinlupa will begin this year.

In terms of landbanking, ALI is still keen on acquiring lots from areas without an ALI footprint or projects that are experiencing accelerated project development.

“We are still looking at opportunities to landbank where we do not have a presence or we need to replenish like Nuvali where the development has been very accelerated,” Ysmael said.

In the Nuvali township project in Laguna, ALI is buying adjacent lots.

“To be able to sustain the momentum, we have to make sure we have landbank that will last for a couple of years,” Ysmael said.

For ALI’s socialized housing unit BellaVita, the company is looking for new parcels outside of Metro Manila amid large demand, Ysmael said.

In the nine months to September last year, ALI’s earnings reached P6.62 billion, up 27 percent from P5.23 billion a year earlier on the back of the strong performance of all its business units.