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

Good afternoon, everyone. I'm Mike Garcia, Head of Investor Relations. Welcome to our briefing on Ayala Land's performance for the first 9 months 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; President and CEO of MDC, Mr. Dante Abando; Residential Business Group Head, Ms. [indiscernible]; States Group Head, Mr. Robert Lao; Group Head of the Commercial business and Chairman of AREIT, Mr. Junie Jalandoni; and President and CEO of APMC, Mr. Laurent Lamasuta. Our business unit heads, members of the management team and the finance group are also in this meeting. We have on the call about 87 participants, and we would like to remind everyone that today's presentation and a copy of the press release are available at ir.ayalaland.com.ph. Our CFO, Mr. Toti Bengzon will present the financial and operating results followed by the Q&A. So just a few reminders before we start, please mute your microphones during the presentation. [Operator Instructions] We will respond by e-mail to any questions not addressed during the briefing. At the start of briefing, let me turn over the floor to Mr. Bengzon for the presentation.

Thank you, Mike. Good afternoon, and thank you for joining us in this hybrid meeting. For those who are in person with us at The Blue Room on the 25th floor of Tower 1, feel free to remove your masks. We are in compliance with IATF guidelines. And as you can tell, things are going back to normal as evidenced by our financials. Allow me to start with a few highlights for the first 9 months of the year. Your company made solid progress during the first 9 months of 2022 as business and consumer activity accelerated under the Philippines reopened economy. Total revenues registered PHP 86.3 billion. This is 19% higher year-on-year. In the third quarter, revenues reached PHP 33 billion, 39% better than the third quarter of last year, and 15% more than the second quarter of this year. Our net income totaled PHP 13.3 billion. This is a 55% year-on-year improvement. PHP 5.3 billion was generated in the third quarter alone. This is 107% higher than last year and 7% more than the previous quarter. Our capital expenditures reached PHP 44.7 billion, going towards the buildup of our residential and commercial projects. And our net gearing ratio stood at 0.76:1 as a result of our ongoing trust to manage debt and liquidity tightly and maintain the strength of our balance sheet. Turning to segment revenues. We recorded PHP 55.2 billion in property development revenues. This is 7% higher year-on-year, led by commercial lot sales and the continuing construction progress in our residential projects. A total of PHP 21.1 billion was recorded in the third quarter. This is a growth of 21% from the same period last year and 15% more than the second quarter. Notwithstanding the higher interest rate environment, the demand for Ayala Land's residential products remained resilient, as the company recorded PHP 77.3 billion in reservation sales. This is 10% higher than last year. Third quarter reservation sales totaled PHP 28 billion. This is a 28% jump from last year and 11% higher than the second quarter. Meanwhile, commercial leasing revenues accelerated by 64% to PHP 23.3 billion with the reinstatement of full mall rental rates, the contribution of new leasing spaces and higher hotel room rates. We posted PHP 8.7 billion in revenues in the third quarter, a boost of 83% from the same period last year and 7% ahead of the previous quarter. Furthermore, mall footfall averaged 96% and tenant sales are now at 90% of pre-COVID levels in the third quarter. Moving on to the income statement. Real estate revenues amounted to PHP 84.2 billion. This is 20% higher year-on-year, led by commercial lot sales, construction progress in residential projects, reinstatement of full mall rental rates and the contribution of new leasing spaces, as well as higher hotel room rates. Interest and other income came in at PHP 2.1 billion, 14% lower year-on-year, as we had sold QualiMed in February of 2021, so coming off a higher base. Equity in net earnings of associates and joint venture companies increased by 23% to PHP 912 million coming from higher revenues at Ortigas Land, our Fort Bonifacio companies, our joint venture with the [indiscernible] as well as the absence of losses from QualiMed operations since we had sold that in the previous year. Interest and investment income increased by 44% to PHP 244 million on account of interest earned from installment sales and higher yield from short-term investments in cash deposits. Other income, which is primarily marketing and management fees from our JV companies, among others, amounted to PHP 952 million, 39% lower than the PHP 1.5 billion in the first 9 months of 2021, which included our 39.2% interest in QualiMed, which we sold to Ayala Corporation. Expenses totaled PHP 66 billion. This is 11% more than last year, given the normalizing of our business operations. Real estate expenses reached PHP 51.9 billion, up 16%, while general and administrative expenses came in 8% higher at PHP 5.1 billion. With higher revenues, our GAE ratio settled at 5.9%, lower than the 6.4% in the first 9 months of 2021. Our EBIT margin continued to improve at 33.8% from 31.7% in the earlier period. Interest expense financing and other charges totaled PHP 9 billion. This is 7% lower than last year as a result of our debt refinancing initiatives. Netting out expenses from total revenues, income before tax grew by 52% to PHP 20.3 billion. Income before noncontrolling interest totaled PHP 16.3 billion. This is 55% more than last year, netting of noncontrolling interests, which jumped by 54% to PHP 2.9 billion, net income attributable to ALI equity holders increased by 55% to PHP 13.3 billion. Commercial large sales, residential construction progress, and the recovery in commercial leasing activity boosted our revenues. Property development revenues increased by 7% and to PHP 55.2 billion. Breaking this down, residential revenues improved by 2% to PHP 45.6 billion, primarily from progress in construction. Office for sale revenues declined by 26% to PHP 2.1 billion due to the full completion of [indiscernible] Park Triangle Tower a BGC and moderate take-up on remaining inventory. Revenues from commercial and industrial lots escalated by 82% to PHP 7.5 billion due to strong investor demand at New Valley, Arca South, and South Coast City estates. In commercial leasing, revenues accelerated by 64% to 22 -- or PHP 23.3 billion with the reinstatement of full mall rental rates, the contribution from new leasing spaces and higher hotel room rates. Compared to the first 9 months of 2021, revenues from shopping centers and hotels and resorts more than doubled to PHP 11.2 billion and PHP 3.9 billion respectively, while revenues from office leasing increased steadily by 10% to PHP 8.2 billion. Moving on to our service businesses composed primarily of Makati Development Corporation and APMC, Ayala Property Management Corporation, our power service companies such as Direct Power Services, and Philippine Integrated Solutions or PhilEnergy and our airline AirSWIFT, total revenues amounted to PHP 5.7 billion. This is 29% higher than the previous period. MDC posted net construction revenues of PHP 2.7 billion, 2% higher, lifted by the contribution of external projects. The APMC, together with the power service companies and AirSWIFT, the combined revenues accelerated by 70% to PHP 2.9 billion on higher AirSWIFT patronage due to more local flights and the higher usage of our car parks across all our developments. Summing up the top line. Real estate revenues amounted to PHP 84.2 billion. This is a 19% growth from last year, combined with interest and other -- I'm sorry, real estate revenues up by 20% from last year at PHP 84.2 billion. And combined with interest and other income of PHP 2.1 billion, our total revenues grew by 19% to PHP 86.3 billion. Moving on to the operating statistics of our various business lines. Let's start with property development. And notwithstanding the higher interest rate environment, the demand for Ayala Land's residential products remains resilient, as we recorded PHP 77.3 billion in reservation sales. This is 10% more than last year. In the third quarter alone, reservation sales came in at PHP 28 billion. This is a 28% jump from last year and 11% higher than in the second quarter. We launched 8 new projects valued at PHP 25 billion in the third quarter, bringing the total to 20 projects worth PHP 60 billion as of September. It is worth noting that 25% of our sales reservations or PHP 19.2 billion originated from our digital selling channels. In terms of sales breakdown by nationality, sales to local Filipinos comprised 65% of the total. This is 4% lower than last year. However, sales from overseas Filipinos and other nationalities surged by 58% and 51% year-on-year, respectively. And this accounted for 22% and 13% share of our total sales. Moving on to our leasing business, starting with our models. As the local business and consumer activity accelerated under the Philippines reopened economy, mall foot traffic and tenant sales averaged 96% and 90% of pre-COVID levels in the third quarter. Total MOS GLA stands at 2.13 million square meters, and the average occupancy for all our malls now stands at 80%. Total lease out rate for the portfolio is 89% and 4 percentage points higher than 85% in the first half of the year. And we have a total GLA under construction of 286,000 square meters. For office leasing, BPO and headquarter tenancy remains stable. Our total GLA stands at 1.36 million square meters. And the average occupancy rate for all our offices is at 84%. The total office pipeline or office pipeline under construction is at 160,000 square meters. Breaking down our tenancy, BPOs occupies 68% of our portfolio, 9% by headquarter tenants -- headquarter type tenants, 4% by co-working spaces and only 2% by POGO. Hotels & Resorts, higher room rates boosted our performance. We have a total of 4,028 rooms in our portfolio. Occupancy and room rates have improved. The average occupancy for all hotels was 56% and 28% for all resorts. Total Hotel and Resorts rooms in the pipeline stand at close to 1,600 rooms. At Seda Nuvali, we will open 92 of the 206 rooms within the month, and we do invite you to visit Nuvali and stay there for a weekend. Our new formats complement our core commercial leasing businesses. For industrial spaces, composed of factory buildings and warehouses, Ayala Land Logistics Holdings Corporation now has a GLA of 309,000 square meters, with the addition of 18,000 square meters in ALogis Calamba and 4,400 square meters in the Cavite Technopark. It is complemented by our cold storage facility, ALogis Artico, which now has a total pallet position of 7,300. Total occupancy stands at 79% and the lease out rate is 77%. For the flats, total bed count remain stable at 1,972 beds. Occupancy, I'm pleased to note, it's now at 94%. For Clock In, we have a seat count of 1,411 seats. Occupancy has similarly improved. It's now at 64%. Our total CapEx stands at PHP 44.7 billion more than half or 55% was spent on our residential projects, while 10% was spent on the completion of our commercial leasing projects, 17% went to the development of our estates, 14% was used for land acquisition, while 4% went to other general purposes. We have a well-managed debt position with 94% locked in fixed rates at an average borrowing cost of 4.3% and an average maturity of 5 years. 97% our debt is contracted on a long-term basis, and we were able to manage our borrowing costs through various refinancing initiatives despite the rising rate environment. Finally, our balance sheet stands strong with a net gearing ratio of 0.76:1. Cash stands at PHP 18.7 billion. Total borrowings increased by PHP 12.7 billion or 6% from the end of December, now at PHP 235.8 billion. Stockholders' equity similarly increased by 6% to PHP 286.3 billion. Results is -- our current ratio stands at 1.89:1, and net debt to equity stands at 0.76:1. So to summarize, our performance for the first 9 months. Total revenues up by 19% higher year-on-year, net income up 55% year-on-year. On segment revenues, property development revenues at PHP 55.2 billion were 7% higher year-on-year and commercial leasing revenues accelerated by 64% to PHP 23.3 billion. With that, allow me to turn you over to our Chairman, and we can start with the Q&A -- I'm sorry, our CEO, rather.

Hopefully, from here on out, what we expect is continued recovery on our various businesses. Again, this is across the board from residential malls, hotels and resorts, offices. Logistics has also been doing very well. So we feel very, very good and quite positive that moving forward, we will basically continue to recover and continue to grow our business from here on out. So with that, maybe what we'll do is, we'll open it up to Q&A.

Thank you, Bobby. We can now proceed with the Q&A. Let me just remind everyone on our house rules. [Operator Instructions] No questions. Okay. We have [Ms. Jelline Gaza] from JPMorgan. Go ahead [Jelline].

Yes, I just have two questions. First is on the margins. I did notice that real estate costs saw a sequential growth of about [Indiscernible] quarter-on-quarter, whereas real estate revenues have lagged. Can you comment on the margin trends that you have seen in the last quarter, specifically in third quarter? And then second question is related to your CapEx budget, what is your expected CapEx for the rest of the year and for next year? And how should we think about new launches from here on?

Okay. Apologies, [Jelline] if you could kindly repeat your question. Unfortunately, there's a call interference.

Okay. Sure. No problem. I have two questions. First is on margins.

Hold on. Yes, sorry. Okay. Go ahead [Jelline].

Okay. First question is on margins. Can you comment on the trend for the third quarter, what drove the decline in margins for the quarter and which specific business? And then second on CapEx, how much do you expect to spend for the rest of the year and next year? And how will this impact your launch by [indiscernible]

Apologies, [Jelline] if I could request you to please type your question on the chat box instead. Unfortunately, there's still this interfering call.

Okay. No problem.

Okay. When we wait for [Jelline's] question...

[indiscernible] I can hear you.

[Indiscernible] call coming from your end?

Yes, we can hear you, but we can still hear the [indiscernible]

In terms of CapEx, so we did spend PHP 44.7 billion for the first 3 quarters. We did guide down our CapEx during the first half briefing, we said we're looking at PHP 80 billion. And there will be some larger layouts in the last quarter of the year, which is typical for Ayala Land. So we should be coming in, maybe around the PHP 70 billion number. So we do expect to spend a little bit more than the run rate that you're seeing today. So we should be close to about PHP 70 billion for the full year of 2022. Now in terms of margins, as you know, we do manage our margins carefully. And despite the increases in price and costs, we've also been able to increase our selling prices by a bit. So -- our target remains the same, vertical mid-30s and horizontal mid-40s. That hasn't changed.

Hope that answers two questions. We have the next question from [indiscernible] of Invesco and also [indiscernible] about presales remain decent how our cancellations and our cancellation is still an issue in the third quarter. Thank you for that question.

So cancellations, we did mention in the first half briefing that we're outlooking cancellations that roughly 10% to 12% higher than what we experienced or booked in 2019. So that remains on trap. It does look like will be ending the full year with a cancellation figure that's about anywhere between 10% to 12% higher than 2019. Going forward yes, I guess you could say we're starting to see moderation in cancellations. So hopefully, as things normalize, then cancellation should also moderate, which we are already starting to see, it's starting to moderate.

And then in line with that, we have a question from Ms. Joy Wang of HSBC. Could you share your residential launch plan for the rest of the year and for 2023? Second, could you share your current refinancing rate and for expiring debt in 2023 and 2024? How should we think about cost of funding?

We're trending at about PHP 80 billion to PHP 90 billion for the year. So it will come in between PHP 80 billion to PHP 90 billion from PHP 75 million last year. And currently, I think we've launched about close to PHP 60 billion. And then on the financing Toti, you may want to cover?

In terms of refinancing, we're pretty much -- we're done for the whole year. after we had that Jumbo PHP 33 billion bond that we issued, which had an average cost of -- the average coupon was 5.8%. So we're pretty much locked in financing for the rest of this year. For next year, definitely, if we do go out to refinance primarily our maturities, interest rates will be higher. As you know, there's a corporate out in the market today. And I would say there -- the cost of their the 7-year bond would be already in the 7% range. So definitely, the rise in interest rates as the regulators have started to push it up will influence or lead to higher interest rates for the company next year. I guess our advantage is we've locked in most of our debt, but what will be impacted will be the maturities that we expect to have next year. And for those, I guess, we can outlook, the interest rate would be at least 200 basis points higher than the average borrowing cost today. And that's just the market. But in terms of the overall cost of debt of the company, I think the good news is you'll see it moving up incrementally and not suddenly, primarily because we've locked in fixed rate and in long tenures.

Thank you, Toti. We also received the same question from Joshua at SB Cap and [Indiscernible] So I hope we were able to address your question. Any questions from our live audience? Yes, [Indiscernible], please go ahead.

I have 3 questions. I'll take it on a per question. For last year, I just wanted to ask more about the level of ASP increases you were able to implement in the third quarter for horizontal and vertical? And then maybe you could share color on the ability of the prospective buyers to absorb those ASP increases.

So the question was, I guess you noted the question all in terms of margins. So just to be clear, our strategy is to be able to maintain our margins. So what we've seen is construction costs basically have increased in line with inflation. So that's about 7%. So we've been able to increase our average selling price by 7%. So basically just in line to be able to maintain our margins. Now as you could see from the results in terms of our own reservation sales that the market continues to be, I guess, accepting of the current pricing that we have in the different product lines or different market segments that we are addressing.

For the horizontal, vertical is it 7% or there's a difference in the quantum for horizontal and vertical for the ASP increases?

That's overall. Basically, give or take average. That's not going to differ between vertical and horizontal.

Second question is on malls. I just wanted to ask if the -- so the tenant sales recovery was at 90%. Is that broad-based? Or are there tenant categories, food and beverage, dining that are outperforming? And then are there tenant categories trailing behind in terms of recovery?

Yes, there are segments that are doing much better than others. Basic essentials are doing well. Luxury, they're doing well. Sports are doing well. Of course, department store is falling behind compared to the others. But by and large, overall, 90% of pre-COVID, I think that the trending is quite okay.

And then last question is on office. I just wanted to ask if there are any BPO tenants who are looking to make a transition from the PEZA to BOI tax regime following the FIRB ruling? And then a related question is, are you still seeing inquiries for additional space or expansion from your BPO tenant base?

On the first question, yes, we see movement from PEZA to BOI. On your second question, are we seeing BPO contracts coming in? Yes, in fact, our -- we started the year with 80% occupancy. We're now around 84%. We hope to be higher than 84% by year-end. On a monthly basis, we see contracts being closed. So again, momentum and trending wise, we're quite happy with what we're seeing.

Would you say -- sorry. I just wondered as if the movement -- the movement to PEZO to BOI is substantial relative to your entire portfolio?

Carol, would you like to answer that?

Maybe let me just add a little bit of flavor. I guess the question relates to whether the transition or the government allowing 100% work from home will eventually lead to some sort of contraction in office space. So number one, the first I want to say is, no, we've not seen it. In fact, what we're seeing is additional inquiries from companies wanting to take up space. So that's basically the -- I think the first thing. The second thing I want to say is, the back to office -- or back to office of the workers have actually been increasing over the last few months. In the -- I think this is around July, August. The BPO workers only around 35% to 40% were back on site. Beginning September, we saw a jump to 60% or a little bit higher than 60%. So that's what we saw from August to September. So we're really seeing -- and for the corporates -- the corporates are basically back 75% to 80% of their workers are back on. So clearly, we're seeing improving numbers in terms of BPOs or corporate headquarters, employees coming back on site. And I suspect also from the discussions we've had with the industry, the BPO industry is trying to allocate more space per employee. So it's no longer the same type of setup were in they were allocating 5 square meters per individual. They're now looking at the higher allocation per employee. I guess that's because of the COVID and people wanting for more space. So net-net, if we look at that I suspect that any contraction will be a bit muted even -- despite the work from home move now that the government is now allowing BPO companies to be able to avail of.

Any follow-up questions from our live audience? Go ahead, [indiscernible].

I'd like to ask a little bit about the Residential segment. So both OFW and sales for foreigners have gone up quite substantially. So I'd like a little bit more detail on what was popular with those 2 categories of buyers?

Yes. Our international has actually grown faster compared to overall growth, we grew 35%. The take-up has grown 35% versus last year. Just to give you a perspective, about 80% of what they buy are verticals. So they tend towards the vertical products. And 72% of our sales are actually in the Avida and Amaia segment. So we are actually very strong in the Middle East, where the Avida and Amaia products are more popular.

And let me clarify, is that already the combined OFW and foreigner or -- that's a combine, okay, so...

Yes, it's a combine, but about 2/3 of that is actually OFW.

Okay. So mostly Metro Manila vertical Avida, Amaya?

Mostly Metro Manila verticals.

Okay. And with respect to the residential launches, I think, at least for the third quarter, you actually launched a lot more vertical product. So I do want to check in your view -- first, going forward, let say, for the fourth quarter should we expect a lot more horizontal or vertical, and at least going from the third quarter, mostly vertical launches is the expectation of the company transitioning back from a period -- COVID where horizontal did very well. And do you now expect back or return to CBDs for instance.

I think we are seeing again resurgence in our verticals. But horizontal -- actually remains very strong. So on the fourth quarter, 85% of our launches will be horizontal.

In line with that, we did receive a question from Daniel [indiscernible] of Eastspring, also on residential. So while you have raised ASPs by roughly 7%, are you throwing in other incentives to drive take up? And another question is, can you give a small granular color on the profile of the cancellations and if possible, inventory levels trends for residential stock.

I'll take the first one. I didn't catch the second one. On the incentives, nothing out of the ordinary. So we didn't have to do anything special. So whatever we're doing in the first half, basically these are the same things that we're doing in the third quarter, I didn't catch the second question. So inventory, we are basically running at around 22 months -- so it's been pretty steady. And I guess you'll see by the end of this year, you can look at how much we've launched versus how much our gross reservation sales numbers would turn out to give you an idea of how we're moving on the inventory. But basically, it's been steady. It's still well within our ideal range of 18 to 24 months. The second question, more color on cancellation, 10% to 12% more. I guess, the only thing I can add there is, you're probably wondering where most of those cancellations are coming from. I think what we're seeing is, it's more marked in the Avida brand and that's aligned with what I guess you would expect coming from a pandemic, wherein it's the -- those on the I guess, outside of the luxury and high affordable market, those on the on the lower end of the scale, who would be affected by the pandemic and consequently, they would also be the ones asking for or there would be the clients that we would be canceling or who would ask for a cancellation.

The only thing that I want to add to what Toti said in terms of cancellation. As you know, [Indiscernible] expired, so there was a bit of a panic -- what you call [Indiscernible]. So hopefully, those people wanted to cancel after [Indiscernible] and hopefully, we'll be able to clean that up this year. So as Toti mentioned a while ago, I expect a little bit more hopefully muted level of cancellations heading into next year.

Just to move to the office segment, also from Daniel [Indiscernible]. Any color on rental trend for office, we are hearing of significant discounts offered for certain office tenants, is Ali seeing similar request for your office space?

Maybe we'll ask Carol to answer the question.

So far on the average per square meter, we are up 4% versus last year. And in terms of renewal, we're within the cap and collar rate of 5% to 10%.

Maybe just add a little bit of color. As you know, there's a bit of supply out there in the market. So the expectation is there may be some stress in terms of rental rates. Now I think you're going to see this in pretty much all the markets. The ones that will have heavy discounting are the ones that are not in the prime areas or not the prime buildings or these are probably your grade B buildings. Now fortunately for us, most of our offices are actually located in very prime areas, if not the best areas in each particular of CBD. And therefore, if you look at our financial results, you could see that to continue to be able to eke out some gain in terms of our rental rates. I think the answer to your question yes, you're right. I think there's some discounting happening, but I think it's happening in [Indiscernible] buildings as well as more marginal locations.

Okay. I hope that answers your question, Daniel. We have a question from Joshua [indiscernible]. Please share also the impact of the strong dollar to the business. How much foreign-denominated exposure does ALI have?

Well, as you could tell in terms of residential, we saw a huge pickup of overseas sales of both overseas Filipino, as well as foreign national Filipino, so that's been quite positive. On our balance sheet, [Indiscernible] our debt, we basically don't have any foreign currency exposure with the exception of in our Malaysian operation, which is completely hedged, is tied to, I guess, our Malaysian sales. So there's no open exposure in terms of foreign currency. In terms of construction, import, again, as I've said, net-net, including fuel price increases, et cetera, et cetera, we're looking at about 7% escalation in terms of construction costs. And that already includes any kind of depreciation of the peso.

Thank you, Bobby. Would we have questions from our live audience? Yes, Mr. RJ Aguirre Of UBS. Go ahead, RJ.

Two questions. One for Toti and one for Bobby if you may. First, can you give us an update on the buyback program or if there's still any on Ayala land? And then second, maybe at this time of the year, you probably concluded your strategy for next year. Is there any different or major changes in terms of assumption or in terms of businesses you'd like to focus on coming into 2023, given the global or the macro trends that we're seeing?

RJ, on the buyback program if these guys on my right gave me a budget, I'd be buying back the day. But they have -- all these projects as they want to finance, so that will be priority. I think for the year, you've seen us buy back about PHP 2 billion worth. If I could do more, I do more. But we do have a lot of projects lined up. And of course, our business is real estate. So we'll prioritize completing those projects, as well as making investments in the real estate sector. So for now, we've spent PHP 2 billion. We'll see if there's any leftover for the year, then certainly, we did take advantage of the current inefficiencies in the market.

And that ties up to our strategy heading into next year. So in a word, RJ, it's all about growth. So it's really growing all our business segments and be that residential, the commercial business, our logistics business. So we're going to be basically continuing to invest and grow these value segments, again, depending on the opportunities we see. But basically, we're gearing up to have launches, continuing launches and hopefully significantly more launches next year.

Thank you, RJ. Any more questions? Okay. We have one from Mr. [indiscernible]. What trends do you see with regard to demand for renewable energy by office tenants? Example, given our lessors requiring more than building -- more in the buildings to source clean energy.

Well, we're basically carbon neutral. So for us, beginning, I think '21 actually already achieve carbon neutrality. So all our buildings especially are carbon neutral. So it's not an issue for us. I mean, the tenants do want it, but we do have it. We were able to lock in fairly good prices for our power requirements. So we do have quite a good rate, both renewable energy that we've been able to lock in. So for all commercial assets, as I've said, that's malls, hotels, resorts and offices. We're basic carbon neutral.

Any questions? Okay. I don't see any more questions in our chat box. We have one more from Ms. Cristina Ulang. Where are we in the property growth cycle? And can you share your market reading?

Well, as I said, we are back in a growth mode. So that's our reading; despite, obviously, there are some concerns on geopolitical, macroeconomic challenges, but you've seen how Q3 has turned out for us. And I think in [Indiscernible], you've seen at least one result from another real estate player. And you've seen that the market continues to be very supportive despite all these challenges that we're seeing both -- particularly globally. So we're encouraged. We're very, very positive in what we're seeing and therefore, really gearing up to have a continuing growth trajectory for the company.

The next question comes from [indiscernible] of Goldman Sachs. Can I ask more about the pickup -- sorry, [indiscernible]. Can I ask more about the pickup in foreign, resi and vertical demand? Is this driven by a weaker peso and our trend so far sustained?

Okay. So the 35% of our sales now come from the OFW and international market. Of that, 2/3 has come from OFW. Most of the market -- most of the products bought in the Avida, Amaya. Now if you just look at where sales is coming from, obviously the U.S., but also the Middle East. And given that this is really driven by a lot of OFW demand, we can only surmise or we can only conclude that the stronger dollar to peso conversion must have something to do with it.

Okay. Thank you, [indiscernible]. I hope that addresses your question, [indiscernible] so you have any follow-up questions? Okay. She asked how should we think about these trends heading into possible macro weakness next year -- the international sales. How should we think about these trends heading into possible macro weakness next year?

Well, I think obviously, the macro environment has been challenging. We've seen interest rates increase even now. And so far, as I have said, for international sales, obviously it's not really been affected because that's been also been dovetailed by the peso depreciation. So if you look at what has happened to the buying power of OFs, so from PHP 50, it's now close to PHP 60. So that's basically a 20% improvement in terms of their purchasing power. So barring any kind of major -- I guess recession has cost us a lot of massive unemployment for Filipinos. So we expect to be able to hopefully sustain the level of overseas Filipino sales and foreign national sales that we've experienced this year.

Okay. We have another question from Cristina Ulang. What do you see in land banking growth? What areas, if you're more than sufficient in inventory and your expectations of capital appreciation onwards?

No, we feel comfortable with our land bank. We have 12,000. So the [Indiscernible] right now is to be able to utilize as much of the 12,000 moving forward. In terms of additional land banking, it just depends on what the opportunity is presented that we continue to look. But also, we're moving change early given the already existing land that we are basically good at least for the next few years in terms of our own requirements. However, if there are good opportunities, then we continue to be open to continue to add on our land bank.

And then your expectations of capital appreciation onwards?

No. It's -- land is the best investment here in the Philippines by far. You look at it on the long-term trend, I don't think any investment vehicle compares. So we don't look at it on a yearly basis, we look at it over a long-term period. That's why we continue to keep that land bank and replenish as we move along. So we're not particularly concerned about the short-term volatility in terms of land prices because what we've seen over time is the land value just continues to increase at a higher level than inflation here in the Philippines.

Follow-up question from Cristina Ulang. Any assets for the AREIT infusion pipeline?

Yes, we're planning. So the REIT, idea is to continue to inject assets into the region. So I think what we programmed is PHP 5 billion to PHP 10 billion a year for EBIT.

Thank you. Final call for questions from our live audience? How about for participants on the line? Okay. I don't see any more questions. I guess with that, we can close our briefing on our performance for the first 10 months of 2022. Thank you very much. And 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. Again, thank you for joining us this afternoon. We have snacks at the back. Please enjoy and have a pleasant day.