Zobel-led property giant Ayala Land Inc. (ALI) is raising ₱75 billion to partly fund its capital expenditures amounting to ₱95 billion in 2025, while infusing ₱20.99 billion worth of mall, office, and hotel assets into real estate investment trust unit AREIT Inc.
ALI President Anna Ma. Margarita Bautista-Dy said in a media and analysts briefing that this year's capex and product launches will allow the company to increase its net income at double the growth rate of the Philippines' gross domestic product (GDP). The Philippine economy grew by a lower-than-expected 5.6 percent last year and is targeted to expand by six to eight percent this year.
This year's capex, 12 percent higher than the ₱85 billion earmarked last year, will fund the expansion of ALI's residential, estate, leasing, and hospitality businesses, said Dy.
Of the amount, 37 percent will be allocated for its residential business development, 25 percent earmarked for estate development, 23 percent allotted for leasing and hospitality ventures, while the remaining 15 percent will be set aside for land acquisitions and general corporate purposes.
She said ALI will be launching projects worth ₱100 billion, consisting of residential, commercial, and industrial properties for sale; as well as expanding its leasing assets by 170,000 square meters (sqm), of which 78,000 sqm will be in malls, 50,000 sqm are office spaces, and 44,000 sqm of logistics facilities.
In a disclosure to the Philippine Stock Exchange, ALI said its board of directors has approved the raising of up to ₱75 billion in debt capital to partially finance general corporate requirements and refinance maturing debt.
The amount will be raised through the issuance of retail bonds or corporate notes for listing on the Philippine Dealing & Exchange Corporation, or the execution of bilateral term loans.
ALI Chief Finance Officer Augusto D. Bengzon said this will be a purely domestic fund-raising exercise, and the firm may actually raise less than ₱75 billion. Half will come from bank financing, while the other half will be tapped from the capital markets.
He added that proceeds will be used to refinance maturing obligations of about ₱25 billion, while ₱30 billion will fund part of this year's capex.
Meanwhile, ALI said it is subscribing to 505.89 million AREIT shares by swapping ₱20.99 billion worth of assets together with its subsidiaries Accendo Commercial Corporation (Accendo), Cagayan de Oro Gateway Corporation (CDOGC), and Central Bloc Hotel Ventures Inc.
ALI and its subsidiaries will pay for the new AREIT shares by swapping these with eight commercial properties, whose value have been validated by a third-party fairness opinion.
The proposed property-for-share swap is for approval of AREIT's shareholders at their annual meeting on April 24, 2025, and pertinent regulatory bodies.
Accendo Commercial Corporation is a joint venture between ALI. and the Floirendo family's Anflo Management and Investment Corporation in Davao City.
The company manages the Abreeza properties and other Ayala developments in Davao City. Ayala Malls Abreeza is part of the 10-hectare mixed-use development that also includes Abreeza Corporate Center, Seda Abreeza, and residential developments.
CDOGC is another joint venture between ALI and Anflo Group, which developed Centrio, a 3.7-hectare mixed-use, master-planned community consisting of the Centrio Mall, an urban lifestyle hotel, residential condominiums, and an office development.
On the other hand, Central Bloc Hotel is the corporate name of the 214-room Seda Hotel in Central Bloc, a two-hectare integrated development in the 24-hectare Cebu IT Park.
Meanwhile, in a separate disclosure, ALI said it will be decreasing its authorized capital stock to ₱20.44 billion from ₱21.44 billion through the retirement of one billion common shares held in treasury. This will be for the approval of its shareholder during the firm’s annual stockholders’ meeting on April 24, 2025.
The one billion common shares redeemed by ALI are considered retired and are no longer re-issuable. The number of authorized shares of the capital stock is reduced accordingly and the articles of incorporation of the corporation must be amended to reflect such reduction.
“The retirement of treasury shares is a positive move for enhancing shareholder value. By reducing the number of common shares that can be reissued in the future, ALI has reduced the dilution risk to holders of common shares,” said Chinabank Capital Corporation Managing Director Juan Paolo Colet.
He explained that “this shows the company is very confident about the strength of its capital structure and balance sheet and sees no need to issue common shares in the near future.”
Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael L. Ricafort said the retirement of treasury shares “effectively reduces the future number or supply of shares in the market and this would help support stock price.”
“Fundamentally, this means more dividend payments per share and, thereby, would lead to higher valuations,” he explained.