Ayala Land cancels P125 billion worth of projects this year

Property developer Ayala Land Inc. said Wednesday it will not launch P125 billion worth of new projects it earlier programmed for 2020 and will reduce capital expenditures to P70 billion from the original target of P110 billion to ensure its healthy and strong financial position amid the coronavirus disease 2019 pandemic.

Ayala Land president and chief executive Bernard Vincent Dy said in a live-streamed annual stockholders’ meeting the company was in the process of adjusting plans to remain resilient throughout the crisis.

“No doubt, our financial performance will be significantly affected for the year. Just during the enhanced community quarantine, we’ve seen significant lost revenues from most of our business lines as the economy practically stood still,” Dy said.

“Having said that, we are now planning to restart our various businesses post-quarantine. As to be expected, the buildup will be gradual and will take time. But we are hopeful that once this pandemic is addressed, our products will continue to be well-positioned to benefit from the renewed growth of the Philippine economy,” he said.

Ayala Land chief finance officer Augusto Bengzon said the company decided not to launch new projects this year. The company earlier disclosed plans to launch P125 billion worth of projects this year.

Bengzon said the property firm has sufficient projects in its development pipeline to sell once the situation normalizes, given the P158.9 billion worth of projects launched in 2019.

“We recognize that we may miss out on some opportunities but we believe that this is the right decision to ensure that Ayala Land is in a healthy and strong financial position throughout this crisis, for however long it may persist,” Bengzon said.

Bengzon said Ayala Land also revised its projections on cash flow from operations to take into account a possible slowdown in residential sales, the rent concessions it provided to mall tenants and the significantly lower occupancy in its hotels and resorts.

“Based on this revised budget, the net cash flow from our operations will still be more than sufficient to cover our projected lower capex spend, our financing expenses and potentially reduce our outstanding debt, all without the need to raise new capital,” Bengzon said.

Ayala Land is currently refinancing relatively expensive short-term loans and plans to issue two-year bonds in June to lower its cost of debt while extending its maturity.

“Our new cash flow budget is for the company to pay down a portion of its outstanding debt obligations this year, bringing it to a level equivalent if not lower than our 2019 year-end debt levels, and which will translate to a further improvement in our net gearing ratio,” Bengzon said.

Bengzon said with P18 billion in cash, unutilized credit lines of P25 billion, action plans in place for prudent cost monitoring and capital allocation, and conservative debt management, the company’s balance sheet would remain robust and enable it to weather the current challenging environment.

Topics: Ayala Land Inc. , capital expenditures , coronavirus disease 2019 pandemic
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