Ayala Land Plans $1.3 Billion Debt, to Focus on High-End Homes

(Bloomberg) -- Ayala Land Inc. is looking at fresh borrowings of up to 75 billion pesos ($1.3 billion) this year as the Philippines’ top property developer plans to continue pushing expensive homes amid still elevated interest rates.

Short-term mortgage rate needs to drop by as much as 75 basis points from 6.5%-6.75% currently “to really encourage the core market to come back,” Chief Financial Officer Augusto Bengzon said in a briefing on Thursday, referring to its main middle income market wherein many seek loans to buy property.

“We are going to lean on the premium segment for as long as interest rates remain fairly high,” Bengzon said. High-end buyers usually pay in full and last year, the company said sales from premium brands Ayala Land Premier and Alveo jumped 25% to 80.8 billion pesos, accounting for 64% of sales.

Low interest rates, high remittances from the nation’s over 10 million citizens living abroad and an outsourcing industry that generates billions of dollars in revenue had in the past driven demand for home purchases.

About 70% of new residential projects that Ayala Land plans to offer this year will cater to high-end buyers and 30% to middle income earners, President Anna Ma. Margarita Bautista-Dy said. The developer expects to launch 80 billion pesos worth of residential projects for 2025, she said.

The unit of the Philippines’ oldest conglomerate Ayala Corp. reported its 2024 net income rose 15% to 28.2 billion pesos, driven by higher residential sales. It earlier announced a target to expand its profit at double the annual growth rate of the country’s gross domestic product in the next five years.

Shares of the property firm slid as much as 9%, the largest decline in nearly five years. Investors took profits after the stock’s two-day spike despite its good earnings report, said Raoul Santos, president of RCBC Securities.

Ayala Land said in a separate stock-exchange filing that it plans to sell up to 75 billion pesos of retail bonds, corporate notes or bilateral term loans this year to partly fund general corporate requirements and pay maturing debt.

The company has 25 billion pesos in maturing debt that it plans to refinance locally this year. It may raise another 30 billion pesos in bonds for capital spending, Bengzon said.

Ayala Land has set a capital expenditure budget of 95 billion pesos for 2025, the highest since 2019. “We are very cautious going forward but still we have quite aggressive plans,” Dy said.

(Updates with comments from company executives and analyst.)

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