Ayala Land, Inc. ($ALI)

Good afternoon, everyone. Thank you for joining us today, and welcome to Ayala Land's First Quarter 2026 Briefing. Let me begin by introducing our panel. Meean Dy, President and CEO; Jed Quimpo, CFO and Treasurer; Mariana Zobel De Ayala, Group Head for Leasing and Hospitality. We're also joined today by members of our Management Committee; Mike Jugo, Head of the Premium Residential Business Group; Robert Lao, Head of Strategic Growth, New Ventures and Central Land Acquisition; Darwin Salipsip, Group Head of Construction Management; Raquel Cruz, Head of the Core Residential Business Group; and Isa Sagun, Chief Human Resource Officer. We likewise acknowledge the presence of our broader management team. Please note that the press release and presentation materials are available on our Investor Relations website at ir.ayalaland.com.ph. For any questions we may not be able to address during the briefing, we will respond via e-mail at the soonest possible time. At this point, I'd like to turn it over to our CFO, Jed, for his presentation. Thank you.

Thank you, Joe. Good afternoon, everyone. I will be presenting Ayala Land's first quarter 2026 performance to be followed by key messages by our -- from our President and CEO. First on the headline numbers. Ayala Land registered total revenue of PHP 37.5 billion for the first quarter of 2026 and generated net income of PHP 5.4 billion, down 14% and 23%, respectively, versus same period in 2025 as a result of continuing headwinds faced by our property development business, which was partially mitigated by the strong performance of our leasing and the hospitality business. We invested a total of PHP 23 billion in capital expenditures, in line with our original 2026 plans, with a notable increase in investments in leasing assets as we continue to execute our pivot to leasing to balance the business profile. Net gearing remains strong at 0.81:1, well within our debt guardrails and debt covenants. In terms of revenue breakdown, revenues from our Property Development business registered PHP 20.3 billion, down 27% versus prior year as our Residential business segment, which registered total revenues of PHP 17.4 billion, continued to face market sentiment headwinds and uncertainties. Similarly, our Estate lot segments composed of commercial and industrial lots for sale, which registered PHP 2.9 billion in revenues, is also down versus same period last year, wherein we saw strong commercial lot bookings in quarter 1 2025. On the other hand, our portfolio of Leasing and Hospitality businesses was solid, growing by 9% versus the same period last year. Excluding the impact of our sale of our 50% share in Alabang Commercial Center, our Leasing and Hospitality business on a like-for-like basis grew by 12%. Shopping centers registered revenues of PHP 5.8 billion, up 2% versus prior year on the back of the reinvention of our flagship malls and improved merchant sales. Our Office business delivered flat revenues at PHP 3 billion as contractual escalations was offset slightly by higher vacancy and the resulting sale of the office space owned by Alabang Commercial Center. Our Hospitality business grew by 30%, registering PHP 3.4 billion in revenues, driven by both increased capacity from our newly renovated assets and the recently acquired New World Hotel. Finally, our industrial real estate business grew by 23% at PHP 0.4 billion with significant improvements in occupancies versus prior year. We've also seen growth in our services businesses as a whole. While our net construction or construction revenues from non-Ayala Land clients was slightly down at PHP 2.4 billion, we saw an increase in our property management and retail electricity sales to third-parties, which was up 21% to PHP 0.9 billion. Interest and other income likewise increased to PHP 1.2 billion, up 34% from increases in interest income and marketing and management fees. To our income statement. As mentioned, the company registered a total of PHP 37.5 billion in revenues for the first quarter of 2026. Total expenses amounted to PHP 29.2 billion, minus 12% versus prior year. This is on the back of lower real estate expenses, which was down 16%, but was partially offset by increase in general, administrative expenses. Interest, financing and other charges were stable, up by just 1%. Earnings before tax amounted to PHP 8.2 billion, down 21% versus prior year. After provision for income tax and taking out noncontrolling interest, net income attributable to ALI equity holders amounted to PHP 5.4 billion. Our GAE ratio stood at 7%, slightly up versus same period last year, but our EBIT margin was stable at 35% as we saw increased contribution of leasing business to our overall revenue mix. Let me now move on to our operating results. Notwithstanding market environment, our sales team delivered a total of PHP 28.2 billion of property development sales for the first quarter of 2026. This is just 8% lower versus prior quarter and equivalent to monthly sales of PHP 9.4 billion. Notable as well was that this was delivered despite having no new launches in the quarter. Our sales mix was fairly similar versus prior periods, wherein close to 60% was for Premium Residential, just under 30% in Core Residential and the balance in Estate Lots. Deep diving on our Residential business. Residential sales take-up in the first quarter registered at PHP 24.4 billion, down 22% versus prior year, but steady on a quarter-on-quarter basis. Sales mix between Premium and Core segment is broadly similar to prior periods at a ratio of 2/3 to 1/3, respectively. Within our product offerings, we have seen a notable quarter-on-quarter improvement in sale of horizontal products. And by location, our regional products now account for more than half of our quarterly sales. Buyer profile is likewise broadly the same, with over 70% being sold to local Filipinos, over 15% to overseas Filipinos and the balance to other nationalities. The decline versus same period last year is broadly the same across all 3 segments. Moving on to our Leasing business, first, starting with our shopping centers. As mentioned, our shopping centers delivered a 2% revenue increase versus same period last year. On a like-for-like basis, however, meaning excluding our 50% stake in Alabang Commercial Corporation, the portfolio grew by 8%. Our shopping centers business continued to demonstrate improving lease out. This, plus the delivery of additional gross leasable area this 2026, marks a banner year for the business. In the first quarter of 2026, we opened Phase 1 of Ayala Malls Arca South. We are on track to deliver an additional 190,000 square meters of GLA this year as well as complete the reinventions of our flagship malls by the middle of the year. Our Office business continues to have healthy occupancy versus industry, with a pipeline focus on areas with low vacancy. Lease-out rate was slightly down at 88% versus 90% same period last year due to the additional capacity, which opened late 2025. This year, we will open another 70,000 square meters of office GLA, all of which will be located within our estates, which is our key differentiator. Beyond 2026, we have a pipeline of 250,000 square meters of GLA, which will be located in major CBDs such as Makati, BGC, Quezon City and Cebu. Our hospitality business of hotels and resorts delivered improved occupancy across all our formats. In addition, newly renovated assets are driving both higher capacity and higher room rates. Occupancy for hotels registered at 72%, while resorts occupancy was at 71%, a significant improvement from a year ago. We are likewise on track for the completion of Mandarin Oriental for quarter 4, 2026. Finally, our industrial real estate business saw improvements in lease-out rates. Both dry and cold storage facilities are at mid to high 80%. For 2026, we look to bring on board additional 9,000 pallet positions of cold storage in Cebu. We invested a total of PHP 23 billion for the first quarter, in line with our original CapEx plan, with notable increase in our investments in Leasing and Hospitality, which increased by 53% versus same period last year. Investments in Leasing and Hospitality now account for more than 1/4 of our total capital expenditure. We expect this share to continue to increase for the rest of the year. In terms of our debt profile, we maintained over 80% of our debt contracted long-term, and we've managed to keep our borrowing cost stable at 5.5%. Of our PHP 25 billion of debt maturities this year, we've already refinanced over PHP 15 billion in the first quarter and with the balance of just under PHP 10 billion to be refinanced this second quarter as planned. We continue to prudently manage our yearly maturity levels, ensuring that maturities are at 10% of our total debt on the average. The weighted average maturity of our debt portfolio as of end of first quarter is 4.1 years. This we expect to lengthen by end of 2026 as we convert short-term debt into long-term debt for the remainder of the year. Our balance sheet remains solid, with net gearing ratio of 0.81:1, well within our guardrails and debt covenants. Given current conditions, we have increased our cash and cash equivalents position to PHP 21 billion. We ended the first quarter with over PHP 1 trillion in assets, PHP 17.5 billion more than the end December 2025 levels. While our net debt increased in Q1, we view this as temporary, and we continue to aspire for minimal incremental increase in debt for the full year 2026, with cash generated from operations and proceeds from our portfolio management. Our debt service coverage ratio continues to be more than adequate, with current ratio more than 1.5x and our interest rate coverage ratio comfortably way above 4x. In summary, despite market headwinds in property development, Ayala Land delivered PHP 37.5 billion in revenues and net income of PHP 5.4 billion. We continue to invest in the business totaling PHP 23 billion of CapEx with a notable increase in leasing asset. Balance sheet remains strong with net gearing of 0.81:1. This ends my presentation. Thank you for listening, and let me turn over the floor now to Meean.

Thank you, Jed, and good afternoon to everyone. Our strategy for 2026 is clear and deliberate: to ensure that capital discipline and balance sheet strength are maintained; to expand our Leasing and Hospitality platform; and to maintain stability in our Property Development business. We are growing by strengthening our recurring income base while pacing our Residential business to ensure we can deliver with certainty. The Middle East conflict is an external shock that is challenging the domestic macro environment. But this context also makes Ayala Land's strengths clearer, high-quality assets, balance sheet discipline, the ability to keep executing where demand and conviction remain strong and a Leasing and Hospitality platform that is becoming a larger contributor to earnings and cash flow. We are becoming a more balanced Ayala Land with greater resilience and flexibility to manage the cycles. For 2026, we are targeting minimal incremental debt with capital expenditures largely funded through internally generated cash. In the first quarter, net debt increased by PHP 16 billion, but we expect this to moderate by year-end as residential unit turnovers progress and our leasing assets continue to stabilize and generate steady cash flow. We have recalibrated our CapEx to approximately PHP 50 billion from our original guidance of PHP 70 billion to PHP 80 billion. Our balance sheet remains robust with an asset base of approximately PHP 1 trillion or around 3 times our debt level, and our interest coverage ratio remains above 4x, giving us flexibility to manage the cycle while preserving capacity for long-term growth. Three years ago, we made a deliberate strategic decision to increase the contribution of our Leasing and Hospitality businesses. That strategy is now beginning to show in our results at a time when resilience matters most. Leasing revenue grew 9% for the quarter. And excluding the effect of Alabang Town Center sale, growth would have been 12%. This reflects the strength of a diversified recurring income platform across malls, hotels, offices, industrial leasing and estate-based assets. Of note, these activities are meaningfully shifting Ayala Land's earnings profile. Leasing and Hospitality now account for 34% of Ayala Land's revenues, up from 23% in 2019, and it is on track to grow at double-digit rates and to account for majority of our EBITDA over the medium term. In malls, we are encouraged that growth is not coming only from new space. Foot traffic and same mall sales are up 6% year-on-year and 10% year-on-year, respectively. supported by our renovations and merchant replacement programs across both flagship and core malls. These improvements illustrate how we are making our existing assets more relevant, more productive and positioning them to capture a larger share of the consumer wallet. We expect this momentum to continue. 2026 will be a banner year for our retail platform with 200,000 square meters of additional mall GLA. This is the largest expansion of leasing assets in Ayala Land's history with additional GLA at Ayala Malls Arca South, Nuvali and Evo City as well as the opening of Ayala Malls Gatewalk in Mandaue, Cebu. Hospitality is becoming a more material contributor to Ayala Land. In the first quarter, the portfolio posted 30% year-on-year revenue growth and is now comparable in size to our Office business. This growth reflects improved RevPAR across both hotels and resorts, supported by renovations across 5 hotels and Lagen Island Resort as well as the addition of New World Makati Hotel. We also look forward to the opening of Mandarin Oriental in the fourth quarter of this year. Our Office business remains stable, while Industrial Leasing continues to show good progress with healthy occupancy levels and lease rates. These businesses give us additional stability within the recurring income portfolio and help balance the consumer-facing elements of Leasing and Hospitality. Between 2026 and 2030, we expect to grow our leasing portfolio by 1.2 million square meters of GLA, representing 35% increase from our current portfolio. We are excited not only by the footprint expansion, but by the quality of the assets, the strength of their locations and their relevance to the markets they will serve. Substantially all of these assets will be located within our very own estates. In Property Development, residential presales for Q1 were down 22% and revenue were down 27%, reflecting weaker buyer sentiment and macroeconomic uncertainty. We started the year with a launch target of PHP 30 billion. Given current conditions, we are reviewing launches carefully. As the operating environment becomes clearer, we remain optimistic that we can proceed with selected horizontal launches by the second half of the year. The uncertainties around cost and execution drove us to cancel our Avida Katipunan Heights and pause our Laurean project. These were well-received projects in strong locations, but because construction had not yet begun, we had the ability to act early, minimize disruption, and we will revisit opportunities when cost visibility and market conditions improve. We have a busy year ahead in Property Development. First, we have PHP 130 billion worth of inventory that we will monetize. This gives us the depth to maintain market leadership while being more selective on new launches. Proceeds will be used prudently to preserve balance sheet strength, fund priority investments and return capital to shareholders where appropriate. Second, we will deliver 13,000 residential units in 40 projects to our buyers this year. These are in the final stages of completion and are being turned over in tranches. This supports cash flow, fulfills commitments to buyers and demonstrates that Ayala Land remains very much in execution mode. Our PHP 28 billion stock buyback program ended in early 2026, and the Board has approved a new PHP 10 billion buyback program. This gives us the flexibility to act when there is a meaningful disconnect between the market price in Ayala Land's underlying asset base, earnings profile and long-term growth prospects. And as we monetize assets and generate cash, we will continue to balance reinvestment in priority growth opportunities with returning capital to shareholders, either through special dividends or share buybacks. Our plans for Leasing and Hospitality remain firmly on track. If anything, the current environment reinforces why this strategy matters. In Property Development, we are taking a prudent stance in the near term, but the long-term fundamentals remain intact. The Philippines remains a young, urbanizing consumption-led market, supporting long-term demand for homes, workplaces, retail, hospitality, logistics and mixed-use estates, precisely the areas where Ayala Land has built its strongest capabilities. We will continue to manage capital and cash flow carefully, supported by a strong balance sheet and a diversified portfolio of assets. At the same time, Ayala Land remains very much in execution mode, delivering homes, opening new malls, reinvesting in existing assets, welcoming new hotel guests and supporting the communities where we operate. With our estates as our platform, we are positioning the company to be a stronger, more balanced and more resilient business. Thank you.

[Operator Instructions] The first question is from [indiscernible] of Maybank. [Audio Gap]

Yes. Can you hear me?

Yes.

I'd like to ask a question on residential. The revenues were down, I believe, 21% for -- specifically for residential. Can you provide more color on why this is? Are these cancellations or maybe part of unbooked revenues? Because I believe you still have like PHP 150 billion, PHP 160 billion worth of unbooked revenues. How much of these are non completions?

Jed here. Thanks for the question. If I was to look at the revenue profile on the residential for first quarter 2026, the primary driver of the decline is on new bookings. So it's really a sales-driven decline. Two -- As you know, there are 2 aspects of revenue bookings. The first one is from sales and the other one is from POC. The POC is fairly predictable because that's to a certain extent driven by our ability to deliver. So primary driver is in new bookings. In terms of your question on cancellation, cancellations as impact to overall revenues is less than 8%. So we're still tracking, at least for the first quarter, very similar numbers in terms of cancellation impact as the full year 2025.

The other question is on the malls. The same mall revenue growth or same mall sales growth is about 10%. And I believe the malls grew rental revenues slightly below that. Can you give us an idea on how is that possible? Is it because of the lower rent on the new malls?

So -- correct. So you mentioned that the sales is 10% and the revenues are 8%. We have a large number of our merchants also on fixed revenue. So the tracking of sales to revenue doesn't always follow as cleanly as we'd like. That being said, we had -- we saw incredible growth across particularly some of our maturing assets as we call them. Specifically, One Ayala, we saw grew 33% year-on-year, Manila Bay over 20% year-on-year. Vermosa over 100%. So we're really happy with how those newer malls are maturing.

Sorry, just one last question on residential. So based from the CapEx targets for this year, is it safe to assume that there are minimal or no launches on residential to be expected this year?

I think like I mentioned, what we're looking at are horizontal launches on the second half of the year. That's maybe one segment that we will review, but we'd like to have the second quarter, I guess, to assess that.

Go ahead [indiscernible].

Okay. Can you hear me now?

Yes. We can hear you.

Yes. We can hear you.

Okay. My question is on -- it was mentioned by Meean earlier on the canceling the Katipunan project. Does that mean that you are pursuing and for Laurean? It's -- this is the first -- this is my first question.

Yes. For Katipunan, we canceled the project. So the difference is Katipunan was launched just a few weeks before the war actually erupted. So we were in a much earlier phase of the selling period. So that we canceled. For Laurean, we launched this sometime in September last year, and we said that we would pause that project. And by pause, we mean that we're putting all selling and development on hold for now. And we will revisit it at -- maybe at some point in time when the environment is clearer. We're thinking maybe middle of next year is when we will take a look at it again.

Okay. My next question is again on the Resi side. I wanted also -- I had just heard Jed just kind of mentioned that the 22% decline in revenues is really a function of sales recognition and also the progress of the residential units that -- during the quarter. Can you provide us with clarity on whether you're going to see the same trend in the coming quarters? Or does this seem like it's part of the -- is it going to be lumpy in the succeeding quarters? Or -- yes, I just wanted to understand.

Just to clarify, the first -- the decline in the revenue was, I think, as Jed explained, it's really because of the lower sales and not so much because of any slowdown in completion. So it's really driven by slower take-up in the first quarter. Now as to what we're seeing for the rest of the year, again, I think it's very difficult to make that call right now. I think we'll need the next quarter to see how things will pan out with this disruption that we're facing ahead of us.

Okay. I guess the last question will be on the progress of the leasing assets that are going to come in the second half. How is it looking so far? Any updates on that would be appreciated.

Yes. So we have about 216,000 square meters of mall assets to come online, and they are in full swing. Actually, in the case of Arca, we opened the first phase, so just about 18,000 square meters in February. And we're really looking forward to a number of expansion openings in Greenbelt in TriNoma and then towards the end of the year in Evo City, Nuvali and then finally in Gatewalk, which is in Mandaue, in Cebu. So we are on track.

We have several questions here from Jelline of JPMorgan. First is how much of the 200k mall GLA is currently leased out?

I don't have that exact number for you. Let me get it. But basically, our rule of thumb is 6 months before opening, we should be at 80% leased out to be able to ensure we can hit healthy occupancy at opening.

And then for offices, she has 2 questions. The first is, what's the level of preleasing commitment? And what drove the considerable dip in office revenues on a quarter-on-quarter basis, considering the low GLA contribution of ACC?

Yes. So we actually had 6,000 square meters of Teleperformance, which is a building we have here in Makati, and that contract ended. We've actually since leased it out, but unfortunately, there's a dip for this particular quarter, but we expect for that to pick up by the end of the year. In terms of our new openings, for Evo City, we have -- about 40% of our GLA has warm and active prospects. And for Gatewalk, which is later on in the year, about 20% of our GLA has warm and active prospects.

We also have a question on Resi. Can you please comment on your Resi GPM trend in the first quarter of 2026? How do you expect cost to trend for the rest of the year?

First question was what? Sorry. Second question was cost.

Yes. The first question is, can you please comment on Resi GPM trends in the first quarter?

I think so far, we've been holding the margin -- the margins for all our projects. So the projects that we have are in later stages of completion. So we're not -- we're a little bit insulated from cost effects because of this Middle East crisis.

The second one is on cost. How do we expect that to trend for the rest of the year?

As far as construction cost, I think we're more or less still within our budgeted contingency. So we should be okay. Again, it's because we are in the later stages of construction. I think where we would see more significant or meaningful impact are in projects that we are about to start. So we see different numbers. I think the Philippine Construction Association, PCA, seeing anything from 10% to 30% at this point. So those are for brand new starts. But for now, we're really focused on the delivery of 40 projects, which are in later stages of development. So for now, I think we are managing the effects.

Our next question is from Wendy of Uni Capital.

Can you hear me?

Yes.

For my first question, I might have missed it, but on the reported sales from the Laurean, how much has been recognized or booked or remaining as reservations as of the first quarter of 2026? Is it included in the total? Or has it been canceled already?

The booking is very small because there's hardly any percentage of completion. You wouldn't see it actually in our P&L.

How about in the total sales reservation for the first quarter?

It's been taken out.

Okay. When it comes to the buyers' behavior, are there buyers that have opted for refunds or reallocating within the portfolio? Or have you seen any signs of them waiting to go with your brands, for example?

So when the discussions are going on so far with the buyers of Laurean, those that have done sales take-up, so as you know, we provided them various options, options ranging from staying with the project and discussing with us. We look at it again on or before April 2027, moving to Ayala Land product -- to another Ayala Land product or to those that want their money back, that's also available. So those are evolving discussions at this stage. I don't have the specifics in terms of where they're trading to or all of that. As you might appreciate, it's an important discussion that we need to take with them and it's something that is still ongoing. Our objective is to make sure that the relationship with the buyers continue to remain strong, and we [indiscernible] to whichever of these 3 choices they want.

Might be too early right now to say. I think these are -- we'll need to give the buyers time to decide on this.

All right. And for my last question on the input cost. I know in consolidated figures, a lot of cost pressures from raw materials have been pricing. But do you see any -- or can you pinpoint which construction or raw material is like putting the most pressure on the OpEx, like steel, imported raw materials or whatsoever?

I think you'll -- those are probably not in the OpEx line. You'll probably see it more as part of our cost of goods. So diesel, for example, will affect costs of anything that's excavation or land development, anything imported because shipping costs would also have been elevated. But you'll probably see that more in the cost of goods sold.

Our next question is from Al Hamil of Adram. [AudioGap] We'll move on to Sean. [Audio Gap] We'll get back to you, Sean. We'll proceed first with Carl Sy of Regis.

Let me just check if you can hear me.

Yes, we can hear you, Carl.

So I'll start off with some items related to the first quarter performance. So among them, of course, ACC was sold in 2025. And in order to get a better gauge of the profit part in first quarter '26, could you tell us how much ACC contributed in the first quarter '25?

I can get that to you, Carl. But basically, that would be the differential between the plus 2% and the plus 8% on the shopping center. Now the important thing there, Carl, is, as you know, ACC is a consolidated entity. So while you recognize it at the full line at the top, at the bottom part when you compute the noncontrolling interest, that's when you take out the other 50%. So I think it has 2 different impacts, both from a top line and ultimately at the bottom line.

Okay. And then if you happen to have -- already for the first quarter '26?

Sorry, could you repeat that, Carl?

The unbooked revenue -- unbooked residential revenue?

About PHP 98 billion, right? About PHP 98 billion.

Got it. And then I'll ask about the mall business a little bit this time. So same mall sales growth is 10%. And you did mention that some of the malls actually showed very strong performance like One Ayala and Manila Bay. But I'm curious about the malls that were actually redeveloped, how are they performing and -- relative to previous year and relative to your own expectations?

Yes. So our flagship malls are up 12% year-on-year. So we're quite happy with how that's progressing, especially considering that we've only really completed construction for Ayala Center in TriNoma . We're still closing out on Glorietta and Greenbelt.

Sorry, you mean that's plus 12%, including the ones that have not completed redevelopment yet?

Yes.

Okay. Got it. And then regarding the Iran conflict, you mentioned that CapEx will come down to PHP 50 billion from the previous target of PHP 70 billion to PHP 80 billion. So may I ask what projects or what spending are you cutting? Where are you getting from?

So we will need to prioritize projects that are going to be turned over this year and next year and malls that are opening this year and next year.

Okay. Is it fair to say maybe you're cutting land banking project?

Well, we've been cutting that back for a few years now. So that will continue, yes, Carl.

Okay. And then you mentioned also about construction costs rising by some estimates, 10% to 30%. But in addition to that, I'm curious if there are other disruptions, supply chain disruptions such as it's taking longer to get particular materials? Is it harder to get labor or any other disruptions?

Yes, I think that's something that we anticipated, particularly for projects that are in very early stages of construction, which is partly why -- largely why we decided to put Laurean on pause. But the projects that we are really focusing on now are in later stages of construction or later stages of completion, and we should have less impact from supply chain disturbances for those projects. But for projects that we would start, yes, we would anticipate such disruption.

Carl, maybe to just close out your earlier question. For the first quarter of 2025, Alabang Town Center had PHP 298 million in revenues. That's the retail side, and the office had PHP 43 million in revenues.

So our next question is from Sean. I'll just read it out loud. The first one is, can you share the breakdown of inventory between premium and core now that Katipunan is canceled and Laurean has been paused?

Yes. So total inventory is PHP 150.3 billion. That's sales value. That still includes the paused project of Laurean. If I was to break down the PHP 150.3 billion, about -- just under 80% is in the premium category and just over 20% is in the core category.

He's also asking about our RFO level.

Our RFO as of end of first quarter 2026 is about PHP 18 billion, just a bit over PHP 18 billion.

Our next question is from Al. Will the pause of Laurean have a P&L impact or just cash flow?

As mentioned by our CEO, it's a very minimal P&L impact for us because it's a project that has barely started. So yes, there will be some cash flow impact. But as you know, in terms of pay terms, only a percentage of the sales value is actually on hand with Ayala Land. And as I mentioned earlier, we're offering buyers 3 options. So cash flow impact will ultimately be managed because of the quantum. And then the second one, of course, is if they choose another Ayala Land product, then clearly cash flow impact is negligible for us.

In relation to that question, we also have a question from Russ Toribio of Bank of America. Any update on the treatment of the commissions we paid or have been paid in relation to Laurean?

So we will expense that.

Our next question is from Liam of [indiscernible] Securities.

So my question is more on forward-looking. First is on the BSP's recent key policy rate hike to 4.5%. I just want to hear from you how this might impact your sales take up this year? And if possible, can you share with us the buyer's profile in terms of investors over end users, both for horizontal and vertical projects? That's my first question.

So impact on sales take-up. So typically, well, clearly, increasing in interest rates is discourage, particularly in the core segment where 90%, I would say, of our buyers would be taking up a mortgage. In the Premium segment, that's a much smaller number. So there's a little less, I guess, sensitivity to mortgage rates. As to the split of investors and end users, I would say maybe 50-50 on the Premium segment. But particularly on the Premium segment, investors here are probably ones who are looking for capital appreciation more than yield. So it's a different profile of buyer -- of an investor buyer, particularly in the Premium segment.

I think your answer was choppy during the RFO question. Just to repeat what Jed said, it's at PHP 18.8 billion.

All right. I would like to revert first -- back to my first question because the context of that is that BSP has been instituting interest rate easing since 2024, yet rates didn't really reflect that. So will there be a change in mortgage rates do you think, considering that they have recently increased the key policy rate to 4.5%?

I think a real better person -- or the real better part is to answer that would be the banks, right? From a property developer perspective, you are absolutely correct. We went through a period of an easing cycle. It was over 200 basis points in reduction in policy rates, and that did not have a perfect transmission to the mortgage rates. Best mortgage rates, and I was just tracking it, is at 6.5% for 5 years. So clearly, the transmission on the policy rate reduction did not re down to mortgage rates. Now that we seem to be on a path towards increasing policy rates, it's also, I suppose, hard to say that it will be a perfect transmission on the way up. So far, at least as of -- so far as of our last recording, the 6.5% good rate for 5-year mortgage is still holding. I understand there's a next policy meeting around middle of the year and so we'll see how that goes. My only last comment to that, Liam, is I suppose it also depends on what the risk the banks are seeing in terms of their credit quality. I think those 2 play key aspects for us.

Any other questions? I think we have a question here from Paul [indiscernible].

First of all, am I audible?

Yes, you are. We can hear you.

So I have 2 questions. So first on the margins. I understood the residential margins were already raised earlier. Can you provide us the percentage of margins on the Residential segment, particularly between horizontal and vertical as of end first quarter?

Horizontal 45%, vertical 38%.

Sorry, how much is vertical?

38%.

Okay. Got it. And my last question is on lot sales. So what's your outlook on -- what's the management's plan on lot sales? Because I understood that it is down by 53%. This is coming from 90%, if I'm not mistaken, increase during the fourth quarter?

So lot sales are really lumpy because these are -- some of these lot sales are large in terms of value. I think similarly to the residential, we'll really have to wait and see in the second quarter as to how the market for the lot sales will be. There are a couple of deals that we are currently working on. We have a good pipeline, but I would think that we would need to see how things are in the second quarter before we can make a call on that.

Liam, did you have any additional questions raised? Okay. Here's Liam's questions. Is the 21% drop in Resi sales indicative of full year trend? How has mall foot traffic changed between January, February versus March with the onset of the ME conflict?

Yes. Maybe I'll take the question on the Resi one. So as our CEO mentioned, it's just a bit too early to make a full year call. The Middle East crisis is, what, 40-something days old. Clearly, to give guidance today would be an erroneous or likely an uninformed guidance. So what I would say is that we continue to observe the market. We believe we can have a better call at this as we see how it impacts our second quarter. We look to continue to deliver sales. The quantum targeting, I think that's something that we're trying to look at. On...?

March was actually a strong month from a foot traffic standpoint. Jan and February are generally seasonally lower times. So I don't think yet we've kind of seen the impact through March.

The next question is from Diane from Papa Securities. Are there cancellations or more projects that will be canceled other than what has already been disclosed?

So the answer is no. The reason is both these projects, Laurean and Katipunan, have not yet started construction. All our other projects are in flight.

Any additional questions from the floor or from the chat box, please feel free to type it in. Liam, did you have any additional questions? Go ahead, Jelline. Jelline can you hear us?

Can you hear me?

We can hear you.

Can you hear me? Okay. Yes, I just have a clarification on a comment made earlier wherein it was mentioned that the Laurean presales have been reflected in the first quarter presales. Can I confirm that the entirety of the PHP 9 billion to PHP 10 billion has been reversed and reflected in the PHP 24 billion? And in such case, could you disclose the like-for-like movement in presales without Laurean?

Jelline, thanks for the question. There's 2 -- So the -- as mentioned in the presentation earlier, we are talking about 2 projects, Katipunan, which we canceled. And by virtue of the canceling, we took that out on the sales take-up number. The second one is Laurean, which is on pause. A project on pause is still part of the sales take-up. So Laurean is also -- sales of Laurean are still part of first quarter 2026 numbers.

Okay. So no reversals. Okay.

Yes, ma'am.

We have a question here from [indiscernible] from China Bank regarding development. What drove the core market take-up growth on a quarter-on-quarter basis? How has RFO take-up progressed?

I guess, I suppose the key answer on core market take-up growth is concentrated sales. As you know, we haven't really been launching anything significant on the core market for quite a while now. So our sales teams are continuing to focus to move inventory. As I mentioned earlier, our core inventory is now just less than 20% or just about 20% of our remaining inventory. So that seems to be at a good bright spot for us in terms of very early indications of what could be something that we could bring out to the market. In terms of RFO progress, again, that's something we've extremely shown discipline on. You've seen us actually being able to bring down our RFO to less than 10% of our total inventory. That is still and will continue to be the game plan. Our sales teams are focusing on -- likewise on RFO sales to ensure that from a capital management basis, these units are appropriately remonetized so that we can get back into the game.

We have a question here from Derene. Back in February, before the Iran war, the launches this year was announced to be at PHP 30 billion, roughly half of what it was in 2025. May we know what the figure is now? Just to reiterate what our CEO said earlier, we did not provide a specific absolute amount, but we did say that in the second half of this year, we will be revisiting the potential or the possibility of launching horizontal projects. We have your question from [indiscernible] from Security Bank. Just want to understand the sales trend and reservation sales. Would you have any monthly trend in this? How are the take-up trends since February to April, given the onset of the Middle East conflict? And what's the current strategy to push more sales over the short term?

So typically, the way sales work is the third month of the quarter is the strongest. That's just the way sales works for various reasons. And in the first quarter, because that's also the time where we had the crisis, I guess, happened, March didn't pull it through for the first quarter. So I don't think it -- we can tell you what it is on a quarter-on-quarter basis because sales behaves differently. It's usually the third month of the quarter where really -- it is typically the strongest month. But because of the crisis last quarter, March did not pull it through for us.

One last question from Al Hamil. Is your group planning to be more aggressive in monetizing land bank to help cash flow?

I think we've been quite aggressive in using our land bank. In the past -- I think in the past 2 years, we've been -- or 3 years almost, we've been using about 800 hectares for our own use. So we've been quite aggressive in terms of launching our horizontal projects. So that's usually the biggest user of our land bank. We will be -- we will continue to be very active in managing our portfolio. That includes land bank as well as some of our other assets. And this is really to, I guess, ensure that we are repositioning our asset base to something that is more, I guess, near term versus longer term, moving away from noncore and going into more core assets.

That is the last question. We apologize again for the quality of the audio. We will be sharing a transcript of the call this afternoon. Okay. So that concludes our briefing on Ayala Land's performance for the first quarter of 2026. Again, if you have any further questions, please feel free to reach out to the team directly. And again, a recording of the briefing will be made available on our website at ir.ayalaland.com.ph. Once again, thank you, everyone, and have a good rest of the afternoon.