Ayala Land, Inc. (ALI) Earnings Call Transcript & Summary

So a pleasant afternoon to everyone. I am Blase Aquilizan of Investor Relations. Welcome to our briefing on Ayala Land's performance for the first quarter of 2022. Joining us this afternoon are members of Ayala Land's Management Committee, led by our President and CEO, Mr. Bobby Dy, our CFO and Treasurer, Mr. Toti Bengzon; Estates Group Head and Head of Corporate Marketing and Urban and Regional Planning, Ms. Ma M Dy; Chairman of AREIT and Group Head of the Commercial business, Mr. Junie Jalandoni; President and CEO of APMC, Mr. Laurent Lamasuta; Group Head of the Residential business and Head of Central Acquisition -- Land Acquisition, Mr. Robert Lao; and President and CEO of MDC, Mr. Dante Abando. Members of the management team and the finance group are also on this meeting. We have on the call more than 122 guests, and we would like to remind everyone that copies of Ayala Land's presentation and the press release will be made available on ir.ayalaland.com.ph after this call. Our CFO, Mr. Toti Bengzon, will present our financial and operating results, followed by Q&A. The Head of Investor Relations, Mr. Mike Garcia, will moderate this session. [Operator Instructions] Please state your full name and your organization to be properly recognized. We will respond by e-mail to any questions not addressed during the briefing. Thank you very much. And to start our briefing, let me now turn over the floor to Mr. Bengzon.

Thank you, Blase. Good afternoon to everyone. It's a pleasure to have all of you in our first quarter analyst briefing, and I hope our first briefing in the post-pandemic next normal. Our first quarter 2022 highlights are as follows: Ayala Land posted total revenues of PHP 24.6 billion, similar to what we achieved in the first quarter of 2021. This top line reflects the slight contraction in property development, which outweighed the resurgence in commercial leasing. Our net income came in at PHP 3.2 billion. This is 14% higher due to our continuing cost efficiency measures, factoring out the sale of our stake in Qualimed to Ayala Corporation in February of 2021. Our revenues and net income grew by 6% and 77%, respectively. Our net gearing ratio stood at 0.79:1 as we continue to carefully manage our debt to maintain the strength of our balance sheet. Our Property Development revenues reached PHP 15.9 billion, a slight 2% dip from PHP 16.2 billion in the same period last year. The company received a strong take-up for its commercial lots, but recorded lower residential bookings during the quarter. Our sales reservations totaled PHP 24.1 billion. This is 16% lower than the PHP 28.6 billion in the first quarter of 2021, that period where we launched several blockbuster high-value horizontal projects. However, our -- the average reservation sales for the first quarter amounts to PHP 8 billion, and this is higher than the average of PHP 7.7 billion in month grossly reservations in 2021. And it is also 9% higher than the PHP 22.1 billion in the fourth quarter of 2021. So this reflects some sequential growth. Meanwhile, our Commercial Leasing revenues amounted to PHP 6.4 billion. This is a 26% resurgence from a year ago, driven by higher mobility. Mall footfall and tenant sales averaged 57% and 61% of pre-COVID levels, respectively. And in March alone, when the country transitioned to Alert Level 1, footfall and tenant sales reached 72% and 70% of pre-COVID, respectively. Moving on to our income statement. Real estate revenues amounted to PHP 24.2 billion. This is 5% higher from a year ago, lifted by the Commercial Leasing and Services segments. Interest and other income came in at PHP 386 million, 77% less due to the lower other income, interest and investment income lines. Equity and Net Earnings of our Associates and JV companies rose by 14% to PHP 250 million, driven by higher contributions from Ortigas Land and our joint ventures with the Corp Group and Eton Properties, the Luchio Tan Group. Interest and investment income declined by 19% to PHP 39 million due to lower interest income from customer penalties, installment sales and cash and short-term investment yields. Our other income, composed mainly of marketing and management fees from our joint ventures, among others, fell to PHP 98 million. This is 93% lower than the high base last year, wherein we recorded a PHP 1.4 billion gain from the sale of Ayala Land's 39.2% interest in Qualimed and its hospital buildings in February of 2021 to Ayala Corporation. Our total expenses registered at PHP 19.5 billion, reflecting a slight hike of 1% in real estate expenses of PHP 174 million from the previous period. This was brought about by a 9% decline in our general and administrative expenses, which totaled PHP 1.5 billion, owing to reduced corporate costs and cost containment initiatives. This reduction resulted in a GAE ratio of 6%, better than 6.6% last year. Our EBIT margin stands at 35.1%, slightly lower than the full year 35.3%. Interest expense, financing and other charges totaled PHP 3.5 billion, 4% higher than last year due to higher discounting costs of our AR sale program. Netting out expenses from total revenues, income before tax registered at PHP 5.1 billion, 4% lower than last year. But with a lower effective income tax rate of 21%, our income tax decreased by 35% to PHP 1.1 billion. Thus, income before noncontrolling interest amounted to PHP 4.1 billion, 10% higher than the first quarter of 2021. Netting out noncontrolling interest from our consolidated subsidiaries, which declined slightly by 1% to PHP 893 million. Our total net income attributable to ALI equity holders reached PHP 3.2 billion. This is a 14% increase year-on-year. Without the onetime gain and expenses from the Qualimed sale in 2021, our net income actually grew by 77%. On revenues, our commercial lot sales offset lower residential bookings while leasing revenues improved on higher mobility. The Property Development segment declined slightly by 2% to PHP 15.9 billion. The company received a strong take-up for its commercial lots, but recorded lower residential bookings during the quarter. Residential revenues amounted to PHP 12.9 billion, 5% lower than the previous period. Office for sale revenues decelerated by 56% to PHP 780 million due to the full completion and sellout of inventory of Alveo's Park Triangle Tower in BGC. Meanwhile, revenues from the sale of commercial and industrial lots more than doubled to PHP 2.2 billion on the strong take-up of our commercial lots in Nuvali and Broadfield. The Commercial Leasing segment benefited from the reopening of the economy, with revenues totaling PHP 6.4 billion, up 26% from a year ago. Shopping center revenues accelerated by 49% to PHP 2.9 billion due to higher mobility and tenant sales as the country transitioned to less strict quarantine restrictions. Meanwhile, office revenues grew by 7% to PHP 2.7 billion as BPO and headquarter tenancy and operations remain stable. For Hotels & Resorts, revenues improved by 29% to PHP 823 million because of increased domestic travel and higher room rates. On services, composed primarily of our construction business, Makati Development Corporation, our property management services provided by APMC, our power service companies, and our airline, AirSWIFT, total revenues amounted to PHP 1.9 billion. This is 18% higher mainly due to higher power consumption of our power service clients and the increased operations of AirSWIFT. For MDC, net construction revenues were 25% lower to PHP 710 million as the projects with our unconsolidated joint ventures and external clients near completion which resulted in incremental contribution. For APMC, the power service companies and AirSWIFT, combined revenues registered a 78% increase to PHP 1.2 billion driven by improved operations of our power service subsidiaries AirSWIFT. Summing up the top line of the segments. Real Estate revenues amounted to PHP 24.2 billion, 5% higher from the same period last year. Combined with interest and other income of PHP 386 million, total revenues reached PHP 24.6 billion. Moving on to the operating statistics of our businesses, starting with property development. Sales reservations totaled PHP 24.1 billion, which is 16% lower than the PHP 28.6 billion in the -- or PHP 28.5 billion in the first quarter of 2021, which, if you will recall, was a period when blockbuster, what we call blockbuster horizontal projects were launched. However, it is 9% higher than the PHP 22.1 billion in the fourth quarter of 2021. And the take-up translates to an average of PHP 8 billion per month higher than the average in 2021 of PHP 7.7 billion. And our monthly take-up is clicking at roughly about 66% of our 2019 monthly average. We continue to launch projects to cater to market demand. PHP 17 billion worth of projects were launched during the quarter with a 55%, 45% mix in favor of horizontal projects, which is what the market is looking for. All our brands led sales for the quarter with products such as Ayala Land Premier Ciela in Carmona Cavite, Avida's Patio Madrigal in Pasay City, Alveo's Corvia and Alviera Pampanga and Amaia Scapes Bulacan in Skies Cubao in Quezon City. Our total unbooked revenues as of March 2022 stood at PHP 170 billion. This is PHP 3 billion higher than the level we ended that in 2021. And this will continue to support the growth of our property development revenues in the coming years. We continue to maximize our digital platforms to complement our selling initiatives. And in the first quarter, 27% of our sales reservations originated from these digital channels. In terms of sales breakdown, local and overseas Filipinos accounted for 91% with balance of 9% from other nationalities. Sales to local Filipinos, which account for 69%, amounted to PHP 16.5 billion, 26% lower. While sales from OFWs, which represent 22% of the total, amounted to PHP 5.4 billion, a 36% uplift year-on-year. Meanwhile, sales to other nationalities amounted to PHP 2.2 billion, down 3% from 2021. Next slide, please. Allow me to summarize our key residential project launches during the quarter for Ayala Land Premier. We launched Tranche 2 of Ciela Phase 1 in January with a total value of PHP 2.7 billion and an 81% takeup rate; price per square meter, PHP 48,000; Anvaya Cove, Seaside Point with a value of PHP 2.2 billion, 14% taken up with a price per square meter and average price per square meter of PHP 49,000 per square meter. This is a relatively modest launch with only 36 lots but we've already received 180 letters of interest. So we're just in the process of allocating the lots to the interested buyers. For Alveo, we launched the expansion of Mondia in Nuvali with a total value of close to PHP 2 billion, 50% taken up priced at an average of PHP 40,000 per square meter; for Patio Madrigal, Avida's project in Pasay City worth close to PHP 5 billion, 28% taken up, PHP 320,000 per square meter sales price; and the fourth tower of Serin East Tagaytay with a total value of PHP 2.8 billion, 10% taken up, priced at PHP 210,000 per square meter. Moving on to our Leasing businesses. Let's start with the malls. With the reopening of the economy, mall foot traffic and tenant sales averaged 57% and 61% of pre-COVID levels. In March alone, when the country transitioned to Alert Level 1, foot traffic and tenant sales reached 72% and 70%, respectively. The positive momentum continued in April with footfall and tenant sales at 79% and 74%, respectively. Our total malls GLA now stands at 2.12 million square meters, with an average occupancy rate across all our malls at 79%. Total GLA currently under construction is 293,000 square meters. We are scheduled to open the Ayala Triangle Gardens retail area with 7,000 square meters of GLA in this quarter of the year. Next slide, please. For office leasing, BPO and headquarter tenancy remained stable. Total GLA increased to 1.36 million square meters with the opening of the East Tower of One Ayala in March that had a total GLA of 40,000 square meters. The average occupancy rate for all our offices is 81%. Our total office pipeline stands at 157,000 square meters. For the information, we delivered East Tower of One Ayala, 40,000 square meters. And I'm pleased to note that this is already 87% leased out. BPOs occupy 67% of our total portfolio, 9% by headquarter-type tenants, 4% co-working spaces and only 2% by POGOs. Hotels and resorts. Improved domestic travel boosted our operations. We now have a total of 4,028 rooms in our portfolio. Both occupancy and room rates have improved. The average occupancy for all hotels was 48% and 11% for all resorts. We hosted 28 travel bubbles during the quarter. But with less strict mobility restrictions in place, the resorts will now transition to full commercial operations beginning and this began last April 1, and we will no longer have travel bubbles. Total hotel and resort rooms in the pipeline stands at 1,552, and we look forward to opening 24 rooms at our Hatch Hostel in Sicogon by the third quarter of this year. Our new formats complement our core commercial leasing businesses for industrial spaces, composed of factory buildings and warehouses, Ayala Land Logistics Holdings Corporation expanded its GLA, gross leasable area, to 288,000 square meters with the acquisition of the 64,000 square meter ALogis Sto. Tomas facility. It is complemented by Ayala Land Logistics Holdings cold storage facility, aLogis Artico with a total pallet position of 7,300. Total occupancy stands at 82%, lease out rate is 83%. For The Flats, we have a total bed count of 1,972 between our Makati and BGC facilities, while Clock In continues to have a seat count of 1,411 seats across 6,473 square meters of gross leasable area in the facilities enumerated below. Our total CapEx for the first quarter totaled PHP 14 billion, more than half or 54% was spent on residential projects, 7% on commercial leasing projects, broken down into 3% mall, 2% offices and 2% on hotels and resorts. 23% was spent on continuing estate development, while 14% was used for land acquisition and 2% for other general purposes. Our budget -- our CapEx budget for the year still stands at PHP 90 billion, and we do expect to see some acceleration in CapEx spend in the coming quarters. We have a well-managed debt position with 89% locked in fixed rates. Our average borrowing cost stands at 4.2%, an all-time low over the past 12 years, and our maturity stands at 5.2 years. Just last week, we successfully listed a PHP 12 billion 6-year fixed rate bond on the Philippine Dealing & Exchange Corporation with a coupon rate of [ 5.80 86 ]. This represents a 40 basis point spread from the benchmark rate. The offer was well received by the market and was 5x oversubscribed. Finally, our balance sheet remains strong with a net gearing ratio of 0.79. Cash is steady at PHP 14.7 billion. Debt increased by 3% to PHP 229 billion. Stockholders' equity stands at PHP 271.9 billion. Current ratio of 1.5%. Gross debt-to-equity ratio of 0.84:1. To summarize our highlights in the first quarter of this year, we posted total revenues of PHP 24.6 billion, similar to the first quarter of 2021. This is reflective of a slight contraction in property development revenues, which -- which outweighed the resurgence in commercial leasing revenues. Net income, PHP 3.2 billion, 14% higher due to continuing cost efficiency measures. And again, factoring out the sale of our stake in Qualimed to Ayala Corp in February of last year, revenues and net income grew by 6% and 77%, respectively, CapEx reached PHP 14 billion. Our net gearing ratio stands at 0.79:1 as we continue to carefully manage our debt to maintain the strength of our balance sheet. Property development revenues, PHP 15.9 billion, 2% dip from the same period last year. We did receive a strong pickup for commercial lots but recorded lower residential bookings during the quarter. Sales reservations, PHP 24.1 billion. This is 16% lower than the prior period when we did launch significantly -- a significant number of blockbuster horizontal projects, but it is 9% higher than the PHP 22.1 billion in the last quarter of 2021, reflecting some sequential improvement and on a monthly basis higher than our monthly average in 2021. Commercial Leasing amounted to PHP 6.4 billion. This is 26% higher from a year ago, driven by higher mobility. Mall footfall and tenant sales came in at 57% and 61% of pre-COVID levels. And in March alone, when we transitioned to Alert Level 1, footfall and tenant sales reached 72% and 70% of pre-COVID, respectively. That ends my presentation. Now open the floor to Q&A.

Thank you to our CFO. We will now proceed with the Q&A Again. [Operator Instructions] We have a question from Carls Sy.

I'm Carl Sy of REGIS Partners. I'll just check first if you can hear me.

Loud and clear, Carl.

Yes, we can hear you.

So please, excuse me. I actually do have a number of questions. But I'll start off with, I suppose, some of the simpler ones first. So let's say, on your office segment. So it's been in the news recently that a very large BPO is willing to lose peso incentives in order to implement work from home -- in trying to continue implementing work from home. And I just want to check if any of your tenants have signaled any intention to -- that they might reduce office space with you guys because they'll implement work from home or hybrid?

Carl, this is Bobby. The -- not so far.

Okay. And again, just as with previous periods as well, so far, all of your new contracts or contract renewals have been at flat to higher rental rates, so positive rental conversion...

Yes. Carl, basically, we have -- in all our contracts for renewal, we have a cap and collar, so it's within the cap-and-collar range. And I think, June, this cap and collar is within plus or minus 5%. June, can you confirm that?

That's correct, Bobby.

Okay. Great. I'll ask about the Mall business this time. So you did show the March tenant sales and foot traffic. And I have the, of course, the old presentations. I was wondering if you happen to have with you the, let's say, the December last year foot traffic and tenant sales or no?

If I recall in. I do not know if Chris Maglanoc is here, I think that was close to about -- is Chris Maglanoc here? I thought it was around close to 80% to 90% during that period.

Sorry December specifically? because I had...

For the month of December specifically, but that's what I recall, but maybe I could ask Chris Maglanoc if he is here.

Around 80% in December.

I'm sorry, can you please repeat that?

It's around 80% for December, the foot traffic.

80% for December. That's great. And would it be fair to say that -- so I don't know if you can give numbers on the concessions you grant, but first, if you could, that would be great. But is it fair to say that, let's say, from December to March, you are granting lower concessions to tenants as of March versus December? And I don't know if you can say if, let's say, April or May, you've started granting even less concessions than in March. [Foreign Language]

Yes, Bobby. Carl, generally, yes. The discounts have been lowered as we progress month-on-month. Right now, for April -- for March at least for the first quarter that were around about 30% to 40% discount, but for March -- for April, were around 20% to 25% discount.

Okay. Sorry, that's for fixed rent tenants. yes?

More or less. The fixed rent and the variables are close.

Okay. And then I'll ask about the residential business. So I think I thought you mentioned that based on your launches, 55% are horizontal. I'd like to ask for presales or reservation sales, will you happen to have the figure? Is it comparable?

Sorry, Carl, first quarter reservation sales?

How much is from horizontal versus vertical?

It should roughly be following the -- because our plan this year, Carl, is to do 50-50. If you will recall, historically, we've been launching about 35% horizontal and 65% vertical. So in response to the demand, we're looking at about 50-50; 50% horizontal and 50% vertical. So maybe Robert can confirm, it should roughly be following that mix.

Yes. We sold 45% horizontal, that is around PHP 9.9 billion. And the vertical is around PHP 14 billion.

Vertical is larger.

This year. Yes, yes.

For the first quarter?

Yes. It depends on the brand, Carl, and the higher-end market when we launched horizontal, the higher-end market looked at it as an investment product. So in the higher-end brands, ALP and Alveo, the ratio of horizontal is higher, that's at least around 40% to 50% horizontal. In the middle income market, where we serve majority in the Metro Manila, that's mostly around 70% vertically.

Okay. So I'll ask about the reservation sales this time. So as you mentioned, there is a slight increase relative to the average last year. Now we have had an economic reopening and your Mall business has improved substantially. So I was -- of course, I understand, the Mall business will really be different. But I was wondering if you expect a much better sales performance, at least going forward? So I understand we only went back to Alert Level 1 in March, and the economic reopening has -- in a manner, we have just started. Do you expect that very likely we'll start seeing better numbers throughout the year?

Yes, Carl, based on these GDP numbers, the answer is yes. In particular, if the economy continues to grow at this pace, then that our expectation is that all our business lines will continue to improve significantly.

Sure. And on Residential revenue...

Robert wants to add something there. Robert?

Yes, sir. On a month-on-month basis, the -- from January to February, we keep on improving from PHP 6.5 billion in January, February PHP 7.6 billion, March is PHP 9.9 billion. So there's a continuous increasing trend as we reopen the economy. But of course, there's a penalty during -- in January because of the Omicron surge, we cannot really move. But we're still able to sell around PHP 6.5 billion in sales.

Yes. So again, tracking in a sense, the economic reopening in some respects. Yes. Okay. On the residential revenue this time. So as you said, on the commercial lots, you saw much more sales, much higher sales, but the residential projects, you saw a drop. And I was wondering if this -- if roughly, is this what we should expect going forward? Or is there a timing reason for -- that's why it happened to drop for this quarter, but we should expect better numbers...

That's because the expectation is [ in totality ] to improve. And obviously, it's hard to read things on a quarter-on-quarter basis because there are some, I guess, peculiarities when you look at it quarter-on-quarter, so for example, as Robert mentioned, in January because of the Omicron variant, our domestic sales were really down. So our sales force and even the customers were not able to go out. So that really affected significantly our sales. As you know, Toti also mentioned that it's also dependent on the launches. So last year, we had quite a few of these what we call blockbuster horizontal launches. So that basically gives you some color on what happened in Q1. But as I said, moving forward, if the economy continues to be open, our GDP continues to move at this pace in particular, then we expect that the overall business should improve.

And on, let's say, again, back to the economic reopening, is the pace of construction back to pre-COVID levels?

Yes, close. We're probably at about 95% now of where we were.

And on construction cost this time. So all costs have gone up for everyone. And in particular, for the -- for Residential -- or actually for the property industry, I should say, I think it's yield prices that have gone up on quite a bit. Should we expect some sort of margin hit relative to last year -- for this year?

Yes, if it persists, again, because when you do construction, I mean, it take years to construct. So it depends really how long this price inflation is going to last. But we've seen the steel prices, they actually bounce back to some sort -- there's some sort of reversion to the mean. When you look at it, we've seen this back in 2008 when steel prices went up to as high as, I think, PHP 66 or PHP 69 per kg. I think now we're buying at about maybe PHP 54 or PHP 55. But if you look at it a couple of years ago, it was actually below PHP 30. So the hope is it will revert after the mean and therefore, hopefully, any kind of hit on the margin will be minimized. But again, if this thing persists for years, then the answer is yes, it will definitely hit the margins. But I don't think anybody is anticipating that this will last for years or this will be the, I guess, a new normal for commodity prices.

The next question comes from [ Jeline ], JPMorgan.

So I have 2 questions relating to the Residential segment. The first one is more on the Residential revenues. Could you comment why it was softer year-on-year? And given that it's not related entirely under construction, what could be the reason for that? And then secondly, could you comment on the normalization of payment schemes. Have you started seeing down payment requirements of your peers and even your own going back to prepandemic levels? And sorry, and third, last question is more in the Mall segment. I noticed that the operational GLA has been stagnating at about mid-70s. I'm wondering how you're thinking about this given that Mall rental discounts have started normalizing.

Okay. I think on the first, and I want to make sure that we cover all your questions, Jeline. So on your first question in terms of the residential revenues, actually, it's a combination of factors. One is there's been slower bookings, and this is primarily due to -- as you know, during the pandemic, we had to stretch around the payment terms. So the actual booking takes a little bit more time as you know we need to get about 10% of the payment before we start booking revenues. There's also been some cancellations that happened during Q1. So I think the basic cost, the reduction in terms of our revenue recognition. And finally, obviously, during the Omicron surge in January, full structure again slowed down. So that caused, again, an impact towards revenue recognition of Residential. Next -- sorry, [ Jeline ], can you repeat your second question?

A question about the payment schemes. Has that normalized?

Yes. Maybe I should ask Robert to take that one.

Yes. We are also tightening our payment terms as we see good confidence in the reopening of the economy. So we are starting to tighten before our further [ our DP ] spread of down payment. Now we're for particular projects and units, we are starting to ask spot down payment. But the competition is still very liberal. They still had really long payment terms and spread at 0 down payment.

And your third question, [ Jeline ] has something to do with the Mall in terms of -- I -- you're talking about the mid-70s operating GLA.

Operational GLA.

No. Again, the expectation is as the reopening happens and we're already seeing a lot more merchants looking for additional space. But again, the expectation there is that's going to move up.

Sorry, just a quick follow-up on what you mentioned in the cancelation. Can you give us more color as to which specific brands types of projects or locations or even the extent of the cancellations in the quarter?

Yes, we had a one-off, I think that's fairly large. It happened in ALP. That's a one-off, I guess, cancellation because we had to make some adjustments in some of the designs of the units, and we gave the option to the clients to basically return the unit.

So given that, we're not expecting this to recur in the future.

No, we don't -- yes, we don't expect that to persist moving forward.

The next question is from Wilson Ng, Morgan Stanley. He posted, March reservation sales of PHP 9.9 billion, can we sustain these levels for the rest of the year?

Sorry, the question is PHP 9.9 billion for...?

March reservation sales of $9.9 billion. Can we sustain these levels for the rest of the year?

Well, we're planning to launch PHP 100 billion for the year. So we're hopeful -- we hope that we'll be able to sustain. But again, we'll have to wait and see, assuming that the economy continues to perform at this level. Then I think that we have a good chance to be able to sustain that.

Let us know if you have further questions, Jeline, I still see your hand is raised. Go ahead.

I'm okay. I'm good.

The next question is from Carl.

So regarding the sales cancellations you just mentioned. So I just want to clarify a couple of things. So last year, -- some of the other developers had cancellations in the second half. From what I recall, I didn't notice any drop for you guys with respect to residential revenue. So correct me if I'm wrong, that this -- for this quarter, first quarter, there was something very large. And I want to check first if you can give the number, right, meaning I could compare it to -- or if you can give a number, perhaps can you tell us if it's unusually large relative to even pre-COVID or anything recent? Yes, because your Residential revenue dropped, right?

Yes, I think the answer is it's not normal. I mean, I think it's a bit unusual. That's why I said it's a one-off. It's a one-off cancellation. I don't know, Robert, if you have the exact number for that.

If I can answer the question Robby. In terms of cancellation values, Carl, when we look at 2019, 2020, 2021 and the first quarter of 2022, we were to do a run rate in the first quarter 2022. The cancellation values across the 5 brands is just about similar to what we saw in 2019. So it's not excessively or inordinately high.

Okay. So it's not that unusual then. Okay. And for that ALP project, I'll ask, if this was a vertical project? Is that right?

Yes. Yes.

The next question is from [ Ranier Yu ]. What are you seeing in terms of cancellations? When does ALI book revenue reversals due to cancellations?

So what -- I guess, the question, what are we seeing? It's not significantly different from '20 -- from pre-COVID in terms of absolute values across our 5 brands. And yes, we do a book a reversal when we do the cancellations. But it also gives us the opportunity to immediately resell the unit.

And then typically at a higher price, depending on when it was actually purchased.

The next question comes from R.J Aguirre.

Yes. Actually, that was my question. Given that a lot of your peers have dealt with these types of reports in the past 2 quarters, wanted to get a sense of what it means for yourself, given that you mentioned that, that's a cancellation. Practically a write-off, Toti, if I'm correct?

Yes, we will reverse it yes.

Okay. And do you -- I mean, so given that this is a one-off, we don't expect this to persist, I'm just wondering if the other segments have dealt with this kind of reversals as well? I mean, intuitively, maybe the lower income segments might be a bit more inelastic in terms of having these risks on macro and income under households and how do they behave in this environment? Just want to get a sense if this will affect the lower income segments.

We've not seen it, RJ. Again, I think a lot of it is really dependent on employment. Mortgage, despite the increase in interest rates, we've not really seen mortgage rates move up yet in the same way, you know, as we've seen the benchmark rates increase. So as long as, I think, people remain employed, then I think we should not expect any big cancellation. Do you want to add something?

The quality of our clients is really good. But in terms of segment, the cancellation rate from high end to the lower end is different, but it's normal for us. The cancellation rate for the higher end, it's a lot, lot lower than the middle income. There is a [ shape ] but we're not seeing any significant change.

Okay. So there are 2 types of cancellation, if I remember correctly, one is -- one that will affect your bookings at the revenue level, and one that's really on the presales level that hasn't been booked. Is there an increase as well in terms of the presales that we haven't seen before? I mean, I remember you guys were saying 5% back-out rate. Is that the better term for presales? Is there anything unusual as well on the presales level that we haven't seen before.

That's the fall-out rate.

Yes, yes, fall-out or back-out.

From gross reservation sales to net reservation sales. That was -- that's higher that's not single digit that we will be mid-teens. Now when you go from gross bookings to net bookings, that's where you see the cancellation.

Right. And it's not unusual amount, Toti?

So the fall-out rate is not -- again, similar to our cancellation -- experience in cancellation. It's not significantly alarming. Because if you -- RJ remember, our reservation fees are higher than competition. So to a certain extent, if you're going to pay the reservation fee, you're relatively serious.

And the penalties also for canceling is also high.

We have follow-up from [ Jeline ]. How much for future income did you recognize in the quarter?

Yes, I don't have the exact amount, but that would have been lumped under our interest and investment income, which wasn't much, [ Jeline ] , right, PHP 39 million in total.

The next question comes from Danielo Picache. I think you're on mute. I think we're having some problems with Danielo's [ side ] . Carl, go ahead.

Sorry, I still like to dwell a little bit on the cancellations you mentioned. So I want to clarify. So this is ALP. And you said it was I want to clarify, is this a single buyer that...

No, no, it wasn't. It affected a particular unit type.

Okay. So -- and the nature of the cancellation. So I guess as an example, for the lower brands, the reason I would expect for a cancellation would be they're having financial pressures, right? And I want to clarify that in this instance, that's not the issue.

No, it's not -- it's a feature that we had to basically make some adjustments -- and given that, so we decided to offer to e clients the option for them to decide whether they want to keep it or not given the change that we made.

Okay. Okay. That clarifies a lot.

Danielo, you can go ahead. Okay. I think we're having some difficulties with Danielo's [ side ]. Okay, okay. There are no more questions on the line. I guess with that, we close our virtual briefing for the first quarter of 2022. And if you have...

Jeline has her hand up.

Yes. Sorry to pose a last-minute question. I just wanted to check. I know that margins are not part of the presentation deck, but any comments as to how it behaved in the quarter relative to, I don't know 4Q or even 1Q of last year...

[indiscernible]is the comment, [ Jeline ].

And with that, we close our virtual briefing for the first quarter of 2022. If you have additional questions, please feel free to reach out to us through investor relations at ayalaland.com.ph. Also, a recording of this briefing will be made available on our website, ir.ayalaland.com.ph. Thank you for joining us this afternoon, and have a pleasant week.

All right. Thank you, everyone. Thank you.

Thank you.

Thanks, everyone.