COVID-19 Weighs Down ALI 1H 2020 Performance

Ayala Land Inc. (PSE: ALI) recorded consolidated revenues of P41.2 billion and a net income of P4.5 billion for the first six months of 2020. These represent declines of 50% and 70% respectively from the same period in 2019 due to the impact of COVID-19 on its operations. Revenues from property development amounted to P24.9 billion, a 58% drop mainly due to lower project bookings and suspended construction activity.

Residential revenues also declined 54% to P20.5 billion while office for sale revenues dropped by 86% to P1.4 billion. Revenues from the sale of commercial and industrial lots decelerated by 31% to P3 billion, while sales reservations registered at P38.3 billion — 47% lower than last year given limited selling activities during the quarantine.

“COVID-19 severely impacted our performance in the first half of the year. Although we are seeing some positive signs of recovery in certain product lines, we expect the remainder of the year to be extremely challenging. Our property sales started to gain traction as the economy reopened but the performance of our malls and hotels continue to be seriously affected under the current environment. We are constantly making adjustments in our operations to position the company for renewed growth when the economy recovers,” said ALI President and CEO Bernard Vincent O. Dy.

In response to the ongoing pandemic, the company has so far allocated P5 billion in waived rent to assist merchant partners, while P426 million was raised to support the efforts of Project Ugnayan. It has also earmarked P600 million to assist no-work-no-pay workers in its eco-system. An employee fund-raising program also raised a total of P82.6M to equip three designated COVID-19 public hospitals and Caritas Manila. In collaboration with the COVID-19 Inter-Agency Task Force, the company’s construction arm likewise transformed the World Trade Center into a 502-bed quarantine facility and the Philippine Red Cross lobby into a testing laboratory.

In the first quarter of 2020, Ayala Land launched four projects with a total value of P5 billion. These were Avida Greendale Settings at Alviera in Pampanga, Amaia Steps The Junction Place Aria in Quezon City, Amaia Scapes Cabuyao Series 3 area 2, and Bellavita Alaminos 2, both in Laguna. Consistent with the company’s strategy to maintain financial sustainability during the quarantine period, no new residential projects were launched in the second quarter of 2020.

Office leasing revenues increased by 7% to P4.9 billion through the sustained operations of BPO and HQ buildings. Commercial leasing revenues declined 31% to P12.9 billion given restricted mall and hotel operations and the closure of resorts. Shopping center revenues dropped 43% to P5.8 billion while revenues from hotels and resorts ended 43% lower to P2.1 billion.

The company’s capital expenditures reached P34.8 billion in the period, mainly for residential developments and commercial leasing assets. The full year capex estimate has been adjusted to P69.8 billion from the previously planned P110 billion.

Last month, ALI secured regulatory approvals from the Securities and Exchange Commission and the Philippine Stock Exchange (PSE) for the initial public offering of the first Real Estate Trust Investment (REIT) in the Philippines. AREIT Inc. aims to enable capital recycling to further promote development in the country. Its portfolio includes three Grade A properties in Makati City covering a total gross leasable area of 152,755.80 square meters with a total occupancy rate of 99.9%. The base offer is 456,883,000 common shares at an offer price of ₱27.00 per share, with a stabilization option of up to 45,688,700 common shares. In total, this represents approximately 49% of AREIT’s capital stock. The offer period was completed last August 3, 2020 and the Firm Offer was 2x oversubscribed from retail investors as well as international and domestic institutional investors. AREIT is targeting to list on August 13, 2020.

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