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

Ladies and gentlemen, good morning. Welcome to Ayala Land's 2025 Annual Stockholders Meeting. Please rise for the Philippine National Anthem. [Presentation]

Please be seated. We will now start with our meeting led by our Chairman, Mr. Jaime Augusto-Miranda de Ayala.

Good morning. The meeting will please come to order. A warm welcome to all our stockholders to the 2025 Annual Stockholders Meeting of Ayala Land. Complying with all the applicable rules and after giving our stockholders the opportunity to call for a physical meeting in our notice dated February 24, 2025, we're again holding our meeting in a virtual format pursuant to our By-Laws. Joining us in this meeting are our President and CEO, Anna Maria Margarita BD; Treasurer and CFO, Augusto D. Bengzon; Corporate Secretary, Maria Franchette M. Acosta; Directors, Cezar P. Consing, Fernando Zobel de Ayala, Mariana Beatriz Zobel de Ayala, Rex Maria A. Mendoza, Surendra M. Menon, Daniel Gabriel M. Montecillo and Cesar V. Purisima; and our Investor Relations Head, Joahnna Soriano. Also joining us today are members of Ayala Land Inc.'s Management Committee, other officers and representatives of Isla Lipana & Company, our external auditor. This meeting will have 2 parts. In the first part, our Corporate Secretary will inform us about our compliance with the requirements of this meeting and that this meeting is duly convened. The voting results on 7 matters on the agenda submitted also for stockholders' approval. In the second part, our management will report to our stockholders on our 2024 performance and their forecast for 2025, including our targets and strategic direction. After the management presentation, questions or comments from our stockholders received by e-mail shall be read by our Investor Relations head. Let us now proceed to the first part of the meeting. Ms. Secretary, is this meeting duly convened?

Yes, Mr. Chairman, this meeting is duly convened as we have complied with the requirements under our By-Laws and the applicable rules of the Securities and Exchange Commission. First, our stockholders have been duly notified of this meeting. On March 28, 2025, we distributed to our stockholders of record as of March 10, 2025, the notice of the Annual Stockholders' Meeting and Definitive Information Statement by e-mail posting on our corporation's website and disclosing to the Philippines Stock Exchange. In addition, the notice was published in print and online on April 1, 2025, and April 2, 2025, in the Philippine Star and the Philippine Daily Inquirer. Second, adequate information has been provided to our stockholders on matters submitted for their approval, the voting procedures and other matters that our Corporation is required to provide information on under the Securities Regulation code and the Revised Corporation code. Third, and finally, Mr. Chairman, there is a quorum for this meeting. Present in this meeting by proxy or remote communication or voting in absentia are stockholders owning at least 23,391,215,067 shares, representing 86.50% of the 27,040,938,021 total outstanding shares. The breakdown of the stockholders present in terms of mode of attendance will be reflected in the minutes.

Thank you, Ms. Acosta. Kindly please present the matters submitted by our shareholders for voting and the corresponding results.

Mr. Chairman, there are 7 matters in the agenda for voting by our stockholders. Before I present the voting results, please allow me to mention that a resolution was proposed for each matter and the stockholders voted on the proposed resolutions either by Chairman as a proxy, pursuant to the voting instructions of stockholders or by electronic ballot in Convene AGM or the Voting System. Stockholders could cast their votes beginning March 28, 2025, and may continue to do so until the end of this meeting through the electronic voting via the Voting System. We have tabulated the votes cast as of April 15, 2025, after the end of the proxy validation and preliminary tabulation process. Those votes are from stockholders owning 23,383,759,217 voting shares, representing 99.97% of the total voting shares present and 86.48% of the total outstanding voting shares. I will refer to the results of this preliminary tabulation when I report the voting results for each resolution. The results of the final tabulation with full details of the affirmative and negative votes and abstentions will be reflected in the minutes of this meeting. Mr. Chairman, let me now present the voting results. The first matter for voting is the approval of the Annual Stockholders' Meeting minutes held on April 25, 2024. Resolution #S-01-2025 shown on the screen has been proposed for adoption by the stockholders. Stockholders owning 23,383,759,217 shares or 99.97% of the total voting shares represented in this meeting voted to approve the minutes and the resolution. Therefore, resolution #S-01-2025 has been approved. Our stockholders may continue to access the minutes through the link provided to them with the meeting materials or through ir.ayalaland.com.ph. The second matter for voting is the ratification of all the acts and resolutions adopted from April 25, 2024, until today by our Board, Executive Committee and other Board committees exercising powers delegated by the Board as well as the acts of our officers performed in the general conduct of our business or in accordance with the resolutions of the Board, the Executive Committee and other Board committees and our By-Laws. These acts and resolutions of our Board and its committees are reflected in the minutes of meetings. They are flashed on the screen, including the matters covered by disclosures to the Securities and Exchange Commission and the Philippines Stock Exchange. For this matter, resolution #S-02-2025 has been proposed for adoption by the stockholders. The resolution is now shown on the screen. Stockholders owning 23,377,647,017 shares or 99.94% of the voting shares represented in this meeting have voted to adopt resolution #S-02-2025. Therefore, the resolution has been adopted. The third matter for voting is the amendment of the seventh article of the Articles of Incorporation of the corporation to decrease the authorized capital stock from PHP 21,437,602,946.40 to PHP 20,437,602,946.40 through the retirement of 1 billion common shares held in treasury. Mr. Chairman, our Treasurer and CFO, Mr. Augusto D. Bengzon, will explain and expound on this item.

Thank you, Madam Secretary, and good morning to all our shareholders. Allow me to present the proposed approval for the amendment of the seventh article of the Articles of Incorporation for the decrease of the authorized capital stock from PHP 21,437,602,946.40 to PHP 20,437,602,946.40. Last February 2025, the Board of Directors approved the retirement of 1 billion common treasury shares. To date, the corporation has a total of 2.09 billion common treasury shares arising from mergers within the Ayala Land Group and its share buyback program. The corporation deemed to no longer reissue these 1 billion common shares held in treasury. With the retirement of these common treasury shares, the corporation likewise has to amend the seventh article of its Articles of Incorporation to reflect the decrease of the authorized capital stock from PHP 21,437,602,946. 40 to PHP 20,437,602,946. 40. Thank you, Mr. Chairman.

Thank you, Mr. Bengzon. Before I present the voting results, Mr. Chairman, please allow me to mention that resolution #S-03-2025 was proposed for the approval of the amendment of the seventh articles of the Articles of Incorporation to decrease the authorized capital stock from PHP 21,437,602,946.40 to PHP 20,437,602,946.40 and the stockholders voted on the proposed resolution #S-03-2025, either by the Chairman as a proxy pursuant to the voting instructions of the stockholders or by electronic ballot via the voting system. Mr. Chairman, I am pleased to report that stockholders owning 23,383,759,217 shares, representing 86.48% of the total outstanding shares voted to approve the mentioned amendment of the Articles of Incorporation for the decrease in the authorized capital stock. Therefore, resolution #S-03-2025 has been approved. The fourth matter for voting is the approval of the corporation's performance shares plan. Please allow me to explain this item further. On February 19, 2025, the Board of Directors, upon the endorsement of the Personnel and Compensation Committee approved the ALI Performance Shares Plan or the ALI PS plan designed to drive the corporation's growth strategy, enhance key talent engagement and align with shareholder interests. The ALI PS plan builds on the existing employee stock ownership plan with shares issued forming part of the 3% allocation of authorized common shares for stock options as previously approved. The ALI PS plan shall be paid for by the corporation at market price on the grant date and awarded to eligible employees subject to certain restrictions tied to predefined performance metrics. This program underscores the importance of retaining top-performing individuals who are essential to driving the corporation's continued success and strategic ambitions. For this matter, Mr. Chairman, resolution #S-04-2025 has been proposed for adoption by the stockholders. The resolution is now shown on the screen. Mr. Chairman, stockholders owning 23,045,952,639 shares, representing 85.23% of the total outstanding shares voted to approve the ALI performance shares plan and resolution #S-04-2025. The fifth matter for voting is the election of directors. The Corporate Governance and Nomination Committee of the Board has determined that the following 9 duly nominated stockholders, including the nominees for independent directors, are qualified to serve as directors of the corporation for the ensuing term: Jaime Augusto Zobel de Ayala, Cezar P. Consing, Anna Maria Margarita B. D., Fernando Zobel de Ayala, Mariana Beatriz Zobel de Ayala, Rex Maria A. Mendoza, Surendra M. Menon, Daniel Gabriel M. Montecillo, and Cesar V. Purisima. Mr. Mendoza, Mr. Menon, Mr. Montecillo and Mr. Purisima have been nominated as independent directors. All the nominees have given their consent to their respective nominations. For this matter, resolution #S-05-2025 has been proposed for adoption by the stockholders. The resolution is now shown on the screen. Each of the 9 nominees for directors has garnered at least 22,819,926,558 votes receiving enough votes for election to the Board. Resolution #S-05-2025 has been approved. The sixth matter for approval by our stockholders is the election of Isla Lipana & Company as our external auditor for 2025 for an audit fee of $4,793,000 exclusive of value-added tax and 5% out-of-pocket expenses. The Audit Committee and the Board endorsed this matter for stockholders' approval and resolution #S-06-2025 shown on the screen has been proposed for adoption by the stockholders. Stockholders owning 23,311,455,617 shares or 99.66% of the total voting shares represented in this meeting voted in favor of resolution #S-06-2025 for the election of Isla Lipana & Company as the corporation's external auditor and fixing its remuneration. Thereby, the resolution has been approved. The seventh and final matter for approval by our stockholders is the consolidated audited financial statements of the corporation and its subsidiaries as of December 31, 2024. The financial statements are part of the definitive information statement and the annual report, which are accessible from the corporation's website. For this matter, resolution #S-07-2025 has been proposed for adoption by the stockholders. The resolution is now shown on the screen. Stockholders owning 23,376,973,844 shares or 99.94% of the voting shares present in this meeting have voted to adopt resolution #S-07-2025 for the approval of the consolidated audited financial statements of the corporation and its subsidiaries. As such, the resolution has been approved. Mr. Chairman, this concludes all the matters for stockholders' approval in today's meeting, and there are no other matters for consideration. Stockholders were notified that they may submit proposals for agenda items, but we have received none.

Thank you, Madam Secretary. We may now proceed to Part 2 of this meeting, the presentation of Management Reports. At this point, please allow me to deliver my prerecorded message. Thank you. [Presentation]

Dear shareholders, welcome to you all. Cities evolve over generations, shaped by vision, resilience and a deep understanding of how people live, work and thrive. For over 3 decades, Ayala Land has played a central role in this transformation, developing integrated communities that drive economic activity, foster social interaction and create lasting value. As we reflect on the past year, we recognize the complexities of today's global and local landscape. Yet we also see opportunities to strengthen our role as a partner in nation building. Through disciplined execution, strategic investments and an unwavering commitment to sustainability, we continue to build spaces that shape the future of our country. We entered 2024 with cautious optimism after a challenging year. Global inflation remained longer than expected and interest rate cuts were slower than anticipated. Geopolitical tensions across Europe, Middle East and Asia Pacific kept borrowing costs elevated, contributing to a global GDP growth of 3.2%, an improvement from the 2.8%, but still below historical trends. Here at home, we saw a mixed picture. Inflation and benchmark interest rates eased, providing a more stable environment. The economy grew by 5.6%, the second fastest in ASEAN, though still short of the government's 6% to 6.5% target. This highlights both the resilience of the Philippine economy and the challenges that do remain. Despite these headwinds, Ayala Land delivered its strongest performance yet. Revenues reached an all-time high of PHP 180.7 billion, exceeding pre-pandemic levels by 7%. Net income grew by 15% to PHP 28.2 billion, reflecting our disciplined execution and ability to adapt to evolving market conditions. Beyond financial performance, we ensured meaningful value creation for our shareholders. In 2024, we distributed PHP 7.4 billion in cash dividends, 31% higher than the previous year and allocated another PHP 7.4 billion to our share buyback program. Together, these initiatives returned PHP 14.8 billion to shareholders, equivalent to 60% of the previous year's net income. At the same time, we continue to invest in the future. We deployed PHP 84.6 billion in capital expenditures with 58% directed to residential and leasing projects and 26% to land development, investments that generate jobs that stimulate local economies and provide Filipinos with well-planned communities that grow with them. Ayala Land does not just build developments. We invest in strengthening our estates. Our goal is clear: to keep our communities relevant, valuable and built for generations to thrive. Last October, in partnership with San Miguel Corporation, we broke ground on the Ayala Greenfield interchange along the South Luzon Expressway, a vital link that enhances connectivity across Southern Luzon. For residents and businesses, this means significantly shorter travel times, more efficient access to Metro Manila, Alabang and Nuvali and a stronger economic lifeline between key urban centers. We are also taking a major step in improving urban mobility. In partnership with the Department of Transportation, we broke ground on the Taguig City's Integrated Terminal Exchange in Arca South. Spanning 5 hectares, this transport hub will serve up to 160,000 passengers daily and seamlessly connect to 2 major rail networks, the North-South Commuter Railway and the Metro Manila subway. This is the future of urban mobility, efficient, seamless and accessible. But connectivity is not just about roads and transport hubs. It is also about shared spaces that bring people together. Last year, we celebrated the first anniversary of Car Free Sundays at Ayala Avenue. What started with 12,000 participants now has grown to 19,000 weekly, transforming the Makati CBD into a space for movement, wellness and community. We have since expanded this program across our estates, and we're encouraged to see local governments adopting similar initiatives in their own cities. At the core of all these efforts is a simple but enduring belief. Great cities are built for people. This belief guides every decision we make at Ayala Land. We build with purpose, creating communities that thrive today and well into the future. More than financial returns, I'm proud how sustainability is deeply embedded in our business model. Ayala Land's ESG strategy focuses on pedestrian mobility, on transit connectivity, on site resilience, resource efficiency and local economic development, ensuring that every development is thoughtfully planned to improve quality of life for more Filipinos. In 2024, we took this commitment a step further. Ayala Land launched the country's first sustainability-linked financing program in real estate, a PHP 28.5 billion initiative that ties our financial strategy directly to our environmental impact. Our PHP 14 billion sustainability-linked bond and our PHP 14.5 billion sustainability-linked loan from the International Finance Corporation are structured so that our cost of capital depends on our ability to meet ambitious ESG targets. If we don't deliver, we pay more. This is real accountability. Looking ahead, we see this financing model as a standard for how we raise funds in the future. Beyond financing, our sustainability road map remains ambitious. In step with the Ayala Group's net zero goal by 2050, Ayala Land became the first publicly listed property developer in the country to receive science-based targets initiative validation for both near- and long-term emissions reductions. We have already reduced emissions by 20% compared to business as usual levels, a step forward, but not yet the finish line. Sustainability is about action. It's about accountability and measurable progress. While there is still much to do, our path is clear, and our momentum is strong. Each step reinforces our commitment to long-term value to resilience and to impact. Within the broader Ayala Group's portfolio, Ayala Land remains a valuable and meaningful contributor to our purpose of building businesses that enable people to thrive. Ayala Land is among those that provide the most direct, tangible and visible interactions with our stakeholders. While we are proud that the company has made significant strides over the decades, we know that the best is yet to come. With several initiatives in our pipeline and dynamic talents leading and resources to bring these to life, you can all expect to see an Ayala Land that will delight and excite all who interact with the spaces that we are crafting. I would like to thank Ayala Land's management team led by our President and CEO, Ms. Dy, whose leadership has strengthened our focus on delivering quality developments that create exceptional experiences for our customers and stakeholders. I also extend my gratitude to our Board of Directors for their guidance and wisdom in shaping Ayala Land's strategic direction. To our shareholders and stakeholders, we deeply appreciate your trust and support. Ayala Land remains committed to enriching communities and driving the progress of Filipinos for generations to come. Thank you. I now turn you over to our President and CEO, Ms. Anna Maria Margarita B. D.

Good morning, everyone. Please allow me to deliver my prerecorded message, followed by the corporate video. Thank you. [Presentation]

Dear shareholders, we entered 2024 with a sense of optimism, buoyed by easing inflation, the prospects of rate cuts and a strong GDP outlook. However, the reality proved more complex. Inflation was stickier than expected, global market volatility intensified and concerns regarding oversupply in select Metro Manila condominium markets surfaced. Yet, despite these headwinds, Ayala Land delivered strong results. Our growth was anchored on the strength of our unique and diversified portfolio. Total revenues reached a record high of PHP 180.7 billion, a 21% increase from the previous year. Net income rose to PHP 28.2 billion, up 15% from 2023 levels, exceeding our target of doubling GDP growth. We demonstrated our agility to pivot in a difficult environment, achieving our growth aspirations through a well-executed reinvention program across all our business lines. While we are in good shape, we recognize that we do not operate in isolation and may face a tough road ahead in 2025. Therefore, we employ strategic actions within each business unit. Property Development revenues grew by 22% to PHP 112.9 billion, comprising two segments: residential sales and commercial industrial sales. Residential revenues alone increased by 23% to PHP 94.9 billion, driven by higher bookings across all our brands. Residential sales reached PHP 127.1 billion, up 12% year-on-year, supported by resilient demand from the premium residential segment, horizontal projects and developments in our suburban estates. 2/3 of our sales came from our premium brands, AyalaLand Premier and Alveo. Our core brands, Avida and Amaia, remained ahead of competition amidst market challenges in the middle market segment. While there was a slight decline in reservation sales, we achieved revenues of PHP 27.9 billion, 13% higher year-on-year. This success is due to our focus on moving existing inventory and strategic launches, allowing these brands to hold their ground. We reap the benefits of our consistent focus on catalyzing our estates. As a result, revenues for commercial and industrial lots rose by 34% to PHP 14.6 billion and lot sales increased by 52% to PHP 14.7 billion. We will continue with a deliberate approach of launching in strong market segments, introducing new formats and elevating the quality of our products. With a very warm reception of Park Villas, we look forward to another bespoke project in the Makati Central Business District. It will be cut from the same cloth as Park Villas, but with a more varied unit mix. We envision Laurean to be an urban sanctuary in Makati, an oasis amidst the city's hustle and bustle. More than half a hectare will be dedicated to resort-like amenities, wellness facilities and lounge areas. It will be among the first of Ayala Land Premier's next generation of products, to once again set new standards of quality in the country. Mall revenues rose by 9% to PHP 23 billion, driven by higher overall rental rates, the full year contribution of Ayala Malls One Ayala and improved operations of Ayala Malls Manila Bay. Overall, our malls maintain a healthy lease-out rate of 90%. The reinvention of 4 flagship malls is underway, complemented by our merchant optimization program. Early results show positive gains with same-mall sales increasing by 9%. Encouraged by these early wins, we began refurbishing another 4 malls this year. We aim to deliver unique experiences with our new malls, including a treat for the palate with our food concepts in Arca South, Taguig, an exciting entertainment center in Gatewalk, Mandaue, an elevated Lakeside destination in Nuvali, Laguna and a new retail jewel coming up in Bonifacio Global City. All told, we are on track to add another 700,000 square meters of mall gross leasable area in the next 5 years, with 90% located within our estates. Office leasing revenues grew by 9% to PHP 12.9 billion, supported by increased rental rates and contributions from One Ayala BPO Towers and Ayala Triangle Gardens Tower Two. We ended the year with a vacancy rate of 9%, well below the industry vacancy rate of 20%. Even as we hold our own, we remain very deliberate and selective in our expansion. We are growing our footprint in winner sites in the main central business districts of Makati, BGC, Quezon City and in our estates outside Metro Manila. This year, we are opening our first technohub offices in Nuvali and Atria, Iloilo. These are 4-story buildings that are cost-effective, quick to build and modular. We look forward to opening more of these. We are building new amenities for our next-generation offices and reinventing some of our current ones. Work can now be done anywhere, and our offices need to be more than cubicles. Thus, we will depart from the traditional cookie-cutter view of an office, starting with the renovation of our home base in Makati. We are renovating Tower One to pilot some of these new features such as fitness and wellness amenities, a day care center, unique dining outlets and activated public spaces that promote convergence and collaboration. In our Hospitality business, revenues reached PHP 9.7 billion, up 11% year-on-year. This is attributed to higher average room rates and the contribution of new rooms at Seda Manila Bay and Seda Nuvali Tower 2. In 2024, we began the renovation of 4 hotels for opening this year. And Lagen Resort in El Nido, Palawan will also reopen this year with a new luxury leisure positioning. It will feature fully renovated rooms, new amenities, additional dining destinations and a beachfront. We are investing $500 million in the tourism sector, adding new brands to serve different market segments and forging new partnerships with international brands. We are excited to welcome our first guests to Makati's brand-new Mandarin hotel in 2026. We are also optimistic about the prospects for industrial real estate. As pioneer in Industrial Parks, we are building on our experience to generate recurring income in this sector. Over the next 5 years, we will leverage our land bank to establish a nationwide network of green logistics parks with 4 set to launch this year. These parks will feature both cold storage and build-to-suit facilities and will help improve our country supply chain and food security. With a land bank spanning 10,736 hectares across 53 estates, we are strategically maximizing its potential. We are enhancing connectivity and unlocking value through infrastructure improvements, including Ayala Greenfield South Luzon Expressway Interchange in Laguna and the Taguig City Integrated Terminal Exchange in Arca South. Additionally, we are opening schools, hospitals and churches and providing government centers, parks and open spaces. In 2024, we sold AirSWIFT to Cebu Pacific. Under Cebu Pacific, the transport lakes to Lio, El Nido is strengthened for both our resorts and tourism estate. With higher passenger traffic expected, we will, in turn, double the capacity of our El Nido airport. Capital efficiency and maintaining a stable balance sheet remains central priorities for the company. Our land bank utilization remains on track with an average annual usage of 846 hectares over the past 2 years. We anticipate that we will continue to be net users of land. Meanwhile, our EBIT margins remain healthy at 33%, well within our target range. We are delivering higher shareholder returns with our return on equity now at 9.9%. We expect this to improve as we execute our growth plans. Furthermore, we continue to return value to our shareholders through cash dividends and our share buyback program. Today, we seek your approval to retire 1 billion treasury shares, reinforcing our commitment to increase shareholder returns. Driving these operational achievements are continuous enhancements on 2 fronts: our digital and organizational transformation as well as our sustainability commitments. We have achieved significant progress in 4 key digital initiatives this year for our customers, our sellers and our employees. First is the upgrade of sales force, resulting in a 25% decrease in the processing time of sales transactions. Tools such as the Sellers Portal and Reserve Now assist our sellers and brokers to better manage leads and customer requirements. A buyer's portal, Access AyalaLand, allows buyers to easily monitor their property purchases. And finally, we introduced Hive, a knowledge portal to centralize employee information and streamline transactions. We will elevate these digital tools by expanding their functionality and reach, guided by the insights and the learnings that we continue to gather. Beyond the digital improvement in our human resource system, we continue to build the capabilities of our most valuable asset, our people. We welcomed new talent from regions as diverse as the Middle East, Asia Pacific, Micronesia and North America. To prepare for the future, we embarked on a rigorous talent review process covering all senior leadership roles across the company. And we are proud to have been recognized and to have achieved the top spot as the Philippines Best Employer 2025 by Philippine Daily Inquirer and Statista. With our sight set on our Net Zero 2050 target, we reduced our carbon emission by 20% from our 2024 business-as-usual levels. This was possible as we shifted our properties to renewable energy and pursue decarbonization of our supply chain. To date, we are utilizing renewable energy in 96% of our commercial assets as well as in 2 of our key estates, Nuvali and Circuit Makati. We have 29 green-certified buildings from IFC's EDGE and USGBC's LEED. We will continue to grow our portfolio as we pledge to secure IFC EDGE Zero Carbon certification for 11 hotels in the next 2 years. We also increased our carbon forests by 40% from 586 hectares to 822 hectares. Finally, Makati Development Corporation continues to be one of the largest producers of low-carbon concrete and the first to use recycled steel at scale. We remain steadfast to our sustainability commitment, taking small but meaningful steps towards our goal. Ayala Land is blessed with a number of unique and distinct assets, a trusted brand, a strong portfolio of diverse businesses, a dynamic learning organization and an unparalleled land bank. These assets have served us well through periods of rapid growth and times of challenge. We will continue to invest and strengthen these assets in the immediate future and for generations to come. To our Board of Directors, thank you for your guidance. To our shareholders, your confidence is what fuels our ambition. We remain committed to excellence, to building communities that thrive and to shaping a future where Ayala Land continues to lead. The best is yet to come. And together, we will build it. [Presentation]

At this point, we will now address the questions and comments from our stockholders. Our Investor Relations Head, Ms. Joahnna Soriano will now read the questions and comments from our stockholders.

Thank you, Mr. Chairman. Allow me to start by reading several questions, which we received via e-mail. The first set of questions is from Ms. [ Arlene Mae Jallorina ] and she asks, there are numerous news articles saying that there's an oversupply of condominiums in Metro Manila. Can you provide your outlook on how long this will last? What is the company doing to address the impact on profitability?

Thank you, Jo. May I request our President and CEO, Ms. Dy, to respond to these questions?

Thank you, Mr. Chairman. Recent reports such as those from Colliers point to an oversupply in the vertical residential segment in Metro Manila. It's important to clarify that the cited 98-month inventory level is concentrated within the middle income market with unit prices ranging from PHP 2 million to PHP 12 million and is geographically concentrated in cities like Pasay, Pasig, Paranaque, Quezon City, and Manila. Recognizing early market signals, Ayala Land proactively managed its portfolio even before the release of these reports. As a result, we currently hold less than 2 years of inventory. Most of our holdings are also located outside the high concentration areas cited in the study. In the near term, we are prioritizing our premium brands and horizontal segments in particular. We anticipate that the oversupply may take 2 to 3 years to normalize. Accordingly, we remain deliberate and data-driven in our approach, focusing launches on high-demand areas with low inventory and underserved markets in Metro Manila.

Thank you, Meean. Jo, do we have other questions from our stockholders?

Yes, Mr. Chairman. The second set of questions came from Mr. [ Rogelio Concepcion ]. The questions are, what is the status of your mall reinvention? And are you on track? How soon can we expect to see the impact on earnings?

If we could again call on Ms. Dy to address these questions, Meean?

Yes. Thank you, Mr. Chairman. We are pleased with the ongoing reinvention and merchant optimization program. We are currently at more than 50% complete, which is supplemented by merchants relocated within our malls and is on track for completion by 2026. Based on our experience with the reinvented spaces, we can expect an immediate increase in rent per square meter from the new tenants.

Thank you, Meean. Are there other questions from our stockholders?

Yes, Mr. Chairman. We have another question which came from Mr. [ Antonio Allan Llamas ]. What is the rationale behind the resolution to cancel the treasury shares? Wouldn't it have been better to keep these for future fundraising?

Thank you. Jo. May we call on our Treasurer and CFO, Mr. Bengzon, to address this question.

Thank you, Mr. Chairman. The resolution to cancel 1 billion treasury shares reinforces our commitment to shareholders to preserve the earnings per share uplift generated by our ongoing share buyback program. Moreover, it also eliminates any potential dilution from the new shares generated from the mergers of our unlisted subsidiaries. While we acknowledge that we are foregoing potential funding from the sale of treasury shares, we have more than enough funding options available that we can utilize without issuing equity shares that can dilute our shareholders.

Thank you, Toti. Do we have other questions from the stockholders?

Yes, Mr. Chairman. We have another question from Mr. [indiscernible]. The share price has been challenged since the start of the year. Can you provide more insights on this? Is the company considering increasing its buyback effort through dividends to support shareholder returns?

Thank you, Jo, if I could call again on Ms. Meean Dy to please answer this question.

Thank you, Mr. Chairman. Ayala Land's share price is down around 6% year-to-date, driven by 3 key factors: Number one, the negative sentiment towards the Philippine property sector due to the condominium oversupply in the middle market. Number two, stickier interest rate levels despite policy rate reductions. Number three, ongoing global trade uncertainties, including tariff impact and a cautious outlook on emerging markets. We remain committed to enhancing shareholder returns through a balanced approach of regular cash dividends and share buybacks. We continue with our share buyback program anchored on the view that the current share price does not fully capture ALI's intrinsic value. We have PHP 6 billion remaining from our Board-approved allocation. We have repurchased PHP 7.4 billion last year and PHP 4 billion year-to-date. In 2024, we returned 60% of the prior year's net income to shareholders with buybacks contributing to a 2 percentage point uplift in EPS, which grew by 17%. This strategy reinforces our focus on long-term value creation and earnings growth.

Thanks, Meean. Are there other questions, Jo?

Mr. Chairman, the next question came from Ms. [indiscernible]. Last month, the SEC approved your plan to merge 29 subsidiaries into Ayala Land. What are the benefits of this? And are you planning to do more of this type of restructuring in the future?

If I could request our Treasurer and CFO, Mr. Bengzon, to please address this.

Thank you, Mr. Chairman. As you may recall, during the Annual Stockholders Meeting last year, we sought shareholder approval for the merger of the company with its unlisted subsidiaries, which was duly approved and deemed effective by the SEC as of April 1, 2025. The rationale of this merger is to simplify the ownership structure for operational synergies, efficient funds management and simplified reporting to government agencies. As we continue to optimize operational efficiencies across the Ayala Land Group, you can expect that we will pursue similar restructuring initiatives in the future. Once a new set of subsidiaries have been evaluated and identified, it will be duly endorsed for the required Board approval and shareholder approval.

Thanks very much, Toti. Jo, do we have other questions from our stockholders?

Our next question, Mr. Chairman, came from Mr. Anthony Gilbert Antiquiera. After the opening of Landers Vermosa, what would the next development be in Vermosa?

Again, if I could call on Ms. Meean Dy, our President and CEO, to address this question.

Thank you, Mr. Chairman. In Vermosa, we currently have 53,000 square meters of retail leasable area. Last year, we launched our first Avida mid-rise building in Cavite, Sentria Storeys. The community is flourishing with almost 400 families now living in the estate and 1,500 students studying at De La Salle Santiago Zobel. Following the opening of Landers, we will further enhance existing offerings and strengthen key features to elevate the value of the estate. We are expanding the Vermosa Sports Hub compound to more tournaments this year. We will also start construction of the San Sebastian church and will launch the cold storage and dry warehouse facilities. This will be complemented by launches of residential projects across the premium and core segments.

Thanks, Meean. Do we have any other questions from stockholders?

There are no more questions from our stockholders, Mr. Chairman. Please allow me to thank our stockholders who participated in our Q&A. The link to the audio and video recording of this meeting will be posted on our website. Stockholders may raise any issue, clarification or concern about this meeting within 2 weeks of the posting of the link by sending an e-mail to [email protected].

Thank you, Ms. Soriano. With that, we conclude this morning's proceedings, and the meeting is hereby adjourned. Thank you again to everyone for joining us here today.