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

Good afternoon, everyone. Thank you for joining us today, and welcome to Ayala Land's Second Quarter 2026 Briefing. Let me begin by introducing our panel. N D, President and CEO; Jose Quimpo, CFO and Treasurer; Mariana Zobel De Ayala, Group Head for Leasing and Hospitality; Mike Jugo, Chief Commercial Officer. We're also joined today by members of our management Committee; Robert Lao, Head of Strategic Growth, New Ventures and Senza Land Acquisition; Darwin L. Salipsip, Group Head of Construction Management; Raquel Cruz, Chief Operations Officer; Isabel Sagun, Chief Human Resources Officer; Jaime Urquijo, Head of Urban Estates; and Carissa Feria-Darre, Chief Strategy and Transformation Officer. We likewise acknowledge the presence for 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 answer during the briefing, we will respond by e-mail at the soon as possible time. At this point, I'd like to turn it over to our CFO, Jose Quimpo, for his presentation.

Thanks, Joe, and good afternoon to everyone. Thank you for joining us on this analyst briefing. Allow me to present Ayala Land's financial and operating performance for the first half of 2026 to be followed by an update on our estates and the key messages from our President and CEO. Ayala Land registered total revenues of PHP 75 billion and generated net income of PHP 11.5 billion for the first six months of 2026. That's down 10% and 19% year-on-year, respectively, similar levels to our quarter 1 2026 results. We continue to see expansion of our leasing businesses, questioning the softer performance of our property development business, which has faced macro headwinds. Total capital expenditures came in at PHP 39.5 billion, down 2% versus prior year as we started on our CapEx prioritization and reduction program this second quarter. Our debt level is within our guardrails with net gearing ratio of 0.8x. On the revenue breakdown, revenues from our property development business registered at PHP 41 billion. While still down 22% versus prior year, we are encouraged that our 2Q performance was stable versus prior quarter. Residential business grew by 3% quarter-on-quarter to PHP 17.9 billion, leading to a 6-month revenues of PHP 35.3 billion, 15% lower year-on-year. Revenues from estate lots remained soft versus last year at PHP 3.8 billion. Recall that in 2025, we saw strong commercial lot bookings at Arca South over the same period. On the other hand, our commercial leasing businesses maintained their growth trajectory, rising 9% to PHP 25.2 billion. Shopping center revenues reached PHP 12 billion year-to-date, up 4% year-on-year and isolating the impact of Alabang Town Center sale was actually up 9%. This is anchored on growing merchant sales and foot traffic and also early gains for reinvented flagship malls. Office leasing delivered revenues of PHP 6 billion, 2% higher versus prior year as contractual escalation was offset by slightly higher vacancy. Our hospitality business grew by 28% to PHP 6.3 billion, driven by increased contributions of our renovated assets and the New World Makati Hotel. Finally, our industrial real estate business grew by 15% to PHP 0.9 billion with significant improvement in occupancy in our cold storage facilities this year. Our services businesses delivered 10% year-on-year growth to PHP 6.5 billion. Net construction or construction revenues from unconsolidated or non-Ayala Land clients was up 4% to PHP 4.6 billion. Meanwhile, property management revenues and retail electricity sales to third parties jumped 28% to PHP 1.9 billion. Our leasing business now accounts for 35% of our total revenues, up from 29% last year, with property development contributing 56% and the balance of 9% from our services business. Moving on to the profit and loss statement. As mentioned, the company registered total revenues of PHP 75 billion for the first six months of 2026, down 10% year-on-year, but stable on a quarter-on-quarter basis. Interest and other income improved 32% to PHP 2.3 billion from higher equity and net earnings from joint ventures and associates and higher management fees. Total expenses stood at PHP 57.1 billion, 7% lower versus prior year with lower real estate expenses down 10% and lower interest financing and other charges down 3%. The growth in our general and administrative expenses moderated on a quarter-on-quarter basis and is now up only 6% year-on-year. Earnings before tax amounted to PHP 17.9 billion, down 16% versus prior year. After provisions for income tax and taking out noncontrolling interest, net income attributable to ALI equity holders amounted to PHP 11.5 billion. Zooming in on second quarter alone, net income reached PHP 6.1 billion, up 13% versus the previous quarter despite the full quarter impact of the Middle East conflict. Our GAE ratio stood at 7%, slightly up versus same period last year, but our EBIT and EBITDA margins were stable at 36% and 43%, respectively. Notably, from an EBITDA perspective, we are now at a 50-50 split between our leasing and our property development businesses. We implemented our CapEx prioritization and reduction program in the second quarter, and we ended the 6-month period with total investments of PHP 39.5 billion, 2% lower on a year-on-year basis. In the second quarter alone, we reduced CapEx disbursement by 27% on a quarter-on-quarter basis down to PHP 17 billion. Notably, though, leasing and hospitality spend now account for more than 1/3 of our total CapEx and is up 17% year-on-year. We expect this shift to continue for the rest of the year as we ramp up on our leasing deliveries. In terms of our debt profile, we maintained over 83% of our debt contracted long term, and we've managed to keep cost of borrowing stable at 5.5%. We have also completed 96% of our refinancing requirements with less than PHP 1 billion left remaining for the remaining five months of the year. We continue to prudently manage our yearly maturity levels, ensuring that debt maturities are at about 10% of total debt on the average. The weighted average maturity of our debt profile as of end of June also extended to 4.3 years, up from 4.1 years as of end of March 2026. Our gross debt is fairly stable and stands at PHP 338 billion or net debt of about PHP 320 billion, which translates to gross and net debt ratio of 0.85x and 0.8x, respectively, all within external covenants and our internal guardrail. Moreover, we maintain a comfortable liquidity position to service our obligations and fund our growth initiatives. Cash and cash equivalents amounts to over PHP 17 billion. Our current ratio stands at 1.6x, backed by over PHP 450 billion worth of current assets, and our interest coverage ratio is healthy at 4.4x. Let me move on now to our operating results. For property development, total reservation sales reached PHP 53.5 billion, 19% lower year-on-year. Average monthly sales year-to-date is now at PHP 8.9 billion, composed of about 60% in the premium residential business, about 30% on our core residential business and about 15% on our Estate Lots business. Across our product lines, margins are fairly steady and within our expectations, 40% for vertical, 45% for horizontal products and about 60% for our Estates Lots. Zooming in on our residential sales take-up. Total take-up for the first half was registered at PHP 46.4 billion, net of our paused project, which is down 22% versus prior year, but relatively steady on a quarter-on-quarter basis. Sales mix between premium and core segment is broadly similar to prior periods at a ratio of about 2/3 and 1/3. Buyer profile is likewise similar to prior periods wherein over 70% is sold to local Filipinos, about 20% to overseas Filipinos and the balance to other nationalities. In terms of location, notable that our regional products now account for more than half of our sales reservations totaling PHP 24.2 billion. Notable as well is that we saw Metro Manila sales grow on a quarter-on-quarter basis at about 4%. Finally, and most important of all, we'd like to note that our inventory sales value has seen a vast improvement, now totaling only PHP 110 billion or equivalent to about 15 months' worth of sales. It's within our target range and a 3-month improvement for our -- as of end of March number. This is a result of our product and sales management programs. Moving on to our commercial leasing business, starting with the shopping centers. As mentioned, our shopping centers delivered 4% revenue increase versus same period last year. Isolating the impact of Alabang Town Center, revenues actually grew by 9%. Overall lease-out continues to improve, now standing at 90% versus 87% during the prior year. We continue to see healthy footfall despite shortened mall hours due to the Middle East conflict, but is up 5% year-on-year. EBITDA margin is stable at 61% as of end June 2026. We are pleased to also report that we have completed all physical reinvention works across our four flagship malls and remain on track to deliver on our commitment to open an additional 200,000 square meters of new GLA for the remaining part of the year. Our offices continue to maintain above industry occupancy rates on the back of proactive leasing engagement with locators. Lease out is slightly down at 88% versus 91% last year due to new capacity, which opened in quarter 4 2025. Weighted average lease expiry increased to 3.6 years versus 3.5 years same period last year. As of end June 2026, we have already renewed and re-tenanted just under 80% of this year's expiries. Active talks are ongoing to fill the balance within the year. Similar to our shopping centers, EBITDA margin is stable at a healthy 90% level. Our hospitality business of hotels and resorts had relatively stable occupancy rates even with lower foreign tourist arrivals. Our hotels registered 69% occupancy, 2% higher year-on-year, while resorts declined modestly with 57% occupancy. Important to note, though, that we continue to reap the benefits from our renovated assets with new hotels registering a 21% increase in average room rates and [Dagen] more than doubling in room rates, a testament to its elevated facilities and service offerings. As a result, EBITDA margins have significantly improved and is now at 30%. We are also pleased to say that we are on track for the completion of Mandarin Oriental by quarter 4 2026. Finally, our industrial real estate business saw healthy lease-out rates across both our platforms. Dry warehouse lease-out stood at 86%, while cold storage reached 94% across our 32,000 pallet positions. EBITDA margins are likewise stable at 79% and 32% for dry and cold, respectively. This year, we look to bring on board an additional 9,000 pallet positions of cold storage in Cebu and Laguna. Let me discuss a bit about our disclosed infusion into AREIT. As you know, AREIT has been an effective capital recycling tool that supplements our operating cash flows. Since its initial public offering in 2020, Ayala Land has raised just under $1 billion, which we have used to grow our portfolio. This morning, our Board of Directors approved a fresh infusion of PHP 20 billion worth of malls and hotels that only grows AREIT's assets under management but further diversifies its income stream. Post shareholder and regulatory approvals of the transaction, AREIT will grow to PHP 179 billion in AUM, representing a 35% cumulative annual growth rate since its IPO in 2020. Important to note that ALI will continue to own majority of these assets in line with our strategy and as provided by the REIT Act. Asset earnings to be shared by -- to the public shareholders of AREIT are offset by tax savings achieved and the capital unlock. Proceeds raised from this infusion will be used to bolster our leasing portfolio as we continue to build out our commercial leasing pipeline. In summary, Ayala Land registered total revenues of PHP 75 billion and generated net income of PHP 11.5 billion for the first six months of 2026. We continue to see the expansion of our leasing business cushioning the softer performance of property development. Total capital expenditures reached PHP 39.5 billion, in line with our CapEx prioritization and reduction program in the second quarter. Our gearing is within our guardrails with a net gearing ratio of 0.8x. This ends my presentation.

Thank you, Jed. We'll now move on to Jaime for updates on some of our key estates.

Hello. Good afternoon, everyone. So just a few updates on three estates that we thought would be interesting to sort of bring some attention to. The first one that we'll start with is the Makati Central Business District or the MCBD. Really, really, really fascinating things bubbling away within the MCBD. So obviously, [ MaCEA ] over the last couple of years has brought out the Makati 2050 plan, which we land, of course, was very sort of instrumental in sort of helping to also craft. And excitingly, as we speak, four of the country's largest banks currently building their headquarters kind of a stone throw from where we are today, 18 redevelopment projects happening across the MCBD, about 700,000 square meters of new GFA that is currently being built, which to give us some context, it's about 10% of the current GFA within the MCBD. So a lot of new development happening within Makati. Of course, really looking to sort of support that with potentially some public transport initiatives, which holly -- which hopefully, over the next few weeks and months, we can also provide a few more details on. And MaCEA very, very active in really ensuring that the MCBD is extremely deliverable by pushing out some walkability initiatives. A few of us have obviously been aware of some of the initiatives like [ Coffee Sundays ] that have started to sort of be rolled out. Interestingly, we were just looking at some of the figures. We estimate about two million people participated in that last year. So really bringing some really interesting new retention and focus in addition to obviously, the incredible amount of redevelopment that's happening within the MCBD. For Ayala Land, in particular, within the MCBD. We estimate that about 60% of the total land bank for Ayala Land is up for redevelopment or renegotiation over the next 10 years, which provides us a really, really interesting new pool of development to really focus on and hopefully redevelop over the next few years. Next page on Arca. This for us, really, really, really exciting estate, which we think is really approaching a very, very interesting inflection point. I think you've heard us speak in the past about the incredible connectivity assets, which Arca is really blessed with. Obviously, the SEMME Skyway integration, TCITX, which is a bus terminal. And in addition to that, obviously, a station with the subway and NSCR all stopping within Arca. We estimate once all of these assets, specifically on the public transport side are all up and running, that's close to 0.5 million passengers, which our estimates indicate will basically be either boarding or lighting within Arca. So a huge amount of potential, we think, over the next few years, all of these projects hopefully completed in the early 2030s. And then on the commercial side, obviously, Phase 1 of the mall already opened, performing extremely well. We have Phase 2 opening at some point next year and the first macro in the country, which should be opened at some point this year as well. So really exciting things happening in Arca. The final update that I'll provide today is just on Nuvali. And so our largest estate by quite sort of a long shot. About 1/4 of Nuvali still to be developed. And so what we're really excited for now is kind of this next and sort of final wave of development that we're really all going to be focused on. Some really interesting new developments as far on the retail side. Transport connections, also a big area of focus for us to ensure that we can attract really fantastic [ talent locators ] to really help push this [next ] and hopefully final wave of development within Nuvali. Happy to answer any more questions at the end, but those are the three updates on my side. Thank you.

Thank you, Jaime. With that, I'll now hand it over to Meean for her CEO message. Meean? Thank you very much, Joe.

Thank you very much, Joe. Good afternoon, everyone. We entered the second half with momentum. After a challenging first quarter, we made stability our priority for the second quarter, tightening our debt levels, aggressively moving inventory and maximizing the performance of our leasing assets even as the full effects of the Middle East conflict weighed on the business. One quarter does not make a recovery, but our second quarter results show that the actions we've taken are starting to bear fruit. We grew revenues in NIAT quarter-on-quarter. We tempered CapEx and sharpened our focus on collections and significantly cut back on our borrowings. Leasing and hospitality remain the strongest part of our portfolio. Here, we're doing two things: improving our spaces to increase yields and expanding our footprint. The physical reinvention of our four flagship malls is now complete, and we're moving to the merchant replacement phase of the reinvention. The full benefit of these reinventions will take two to three years to show up fully, but the early signs are positive and already being felt. Ayala Center Cebu, the most advanced of our reinventions, saw a 10% year-on-year rental rate growth. Spaces where we've completed a merchant replacement program are seeing an average of 25% increase in rent per square meter. We're continuing the renovations at four more malls, Abreeza, Marquee, Fairview Terraces and Cloverleaf. We are on track to open 200,000 square meters of GLA this year. Of these spaces, 63% are already leased out, and we're confident we'll hit our 70% target by opening. This is also the largest opening for Ayala Mall or Ayala, Ayala Land of our mall portfolio in any single year. On top of that, we are looking forward to our 2027 mall openings as well, another 100,000 square meters of GLA of new assets at Parklinks and Broadfield and additional GLA at Arca South and Ayala Center Cebu. We're excited about the new concepts and brands joining us. Makro in Arca South, Spinneys in Parklinks and San Antonio Plaza Arcade, IKEA in Gatewalk and the repurposing of the Greenbelt Townhomes into Makati's newest lifestyle center. Just last week, we were Apple Pay's launch partner, adding a new digital payment channel for our customers in all our malls. Our office portfolio continues to outperform the market. Occupancy, particularly in our CBD spaces, which make up around 85% of our portfolio remains strong and are ahead of industry levels across the board. The next wave of office space will be in prime locations. This year, we're completing 55,000 square meters of GLA in Arca South in Evo City, both part of the mixed-use developments in our estates. And in 2027, our pipeline adds another 36,000 square meters of GLA to our portfolio and includes Parklinks, which will open alongside our mall, Vertis North in Quezon City and Makati, all strong locations. So together, we're opening 91,000 square meters of office GLA between 2026 and 2027. In hospitality, the impact of our reinventions is immediate and clear. You can see it in the jump in ARR at our renovated hotels, cementing our hotel portfolio's position as the highest yielding in the industry. 10 of our 12 Seda hotels ranked #1 in their competitive sets. And as earlier mentioned, we are excited to open Mandarin Hotel, Mandarin Oriental in December, bringing a new level of luxury to Makati. For property development, this year is about delivering to our buyers and working down our inventory. Of the 13,000 units for delivery, we have delivered 6,000 units and are on track to complete the rest for the second half. Our inventory levels are now in pre-pandemic levels, 15 months overall, 13 months for our horizontal projects. We're ready to restart launching horizontal projects worth PHP 5 billion for the second half of the year, two sequels in the South, Sereneo in Nuvali and South Palmgrove in Lipa Batangas. Both under our Alveo brands and one brand-new Avida project in Cresendo Tarlac, our first residential project in our Cresendo estate, arising downtown 15 minutes away from New Clark City and accessible through SCTEX. We have more launches lined up in 2027, and we will give you a flavor of this in our 3Q report. For the second half, we start rebuilding the business. We're recycling capital through infusions into AREIT. And as mentioned today, PHP 20 billion worth of asset infusion was approved by both the ALI and the AREIT Boards. Our planned capital expenditure for the full year is PHP 60 billion in CapEx with 1/3 allocated to leasing and hospitality. This program is within the funding capacity of the business and will be funded by operating cash flow cash from AREIT infusions or capital recycling from AREIT infusions and other capital recycling initiatives. For the balance of the year, we will pursue our PHP 60 billion CapEx plan to ensure deliveries to our residential buyers and completion of our leasing assets. We're accelerating the AREIT's growth trajectory, and we preserve our planned full year dividend to our shareholders of 31.5% payout ratio. The first half of the year tested the business and required decisive action. The second quarter performance is an indication that these measures are taking hold. We entered the second half with a stronger control of the business and confidence in the enduring advantages of the portfolio our estates and our people. Our task now is to sustain the progress rebuild this momentum and translate Ayala Land's strengths into improved performance and long-term value. Thank you very much.

Thank you, Meean. [Operator Instructions] For the first question, any questions from the floor? Hi, Raffy go ahead please.

Thank you for the briefing. This is Raffy from Maybank Securities. I just wanted to ask about -- I mean, whether Ayala Land is also affected by the steep decline in lease to sell -- license to sell permits as reported by some of the property consultants in the past few weeks. Is that also a reason why the decline has been quite steep in the past two quarters? That is my first question.

Thank you, Raffy. It's not -- we are affected if we were going to launch new projects, but we believe it's not related to performance and demand right now. We're -- we have enough inventory to basically hit the sales targets that we set out for. So it's not really affected by any kind of delays in the launches.

Okay. So perhaps you can give more color also on the second quarter presales, our reservation sales in terms of the buyer quality and so on.

Okay. So second quarter was similar to what's happening in the market challenge because we felt the full impact of the Middle East conflict, which started in March. Again, despite that, because our sellers constantly in touch with clients looking for opportunities, was able to deliver. We're seeing a lot of first-time buyers taking advantage of opportunities and some investors as well, which has allowed us to really move inventory in the second quarter.

Okay. I think my last question is regarding the leasing business for the malls business. How is the time line so far? Because I think most of the launches are really back ended in the second half. So how is it shaping up maybe so far?

Yes. So I think our CEO mentioned that for the reinvention, the physical works have been completed. So now it's about ensuring that we can bring in the concepts to kind of match the new physical experience. For those that have already been replaced or refreshed, we've seen a 25% uplift in the rental rates. For the new malls coming online, we're on track. We're excited to open Nuvali first week of November, and we'll open Gatewalk in Mandaue Cebu December as well, and that's anchored by IKEA. In between now and then, we have a couple of other expansions are opening. So we have -- we did a soft opening of Greenbelt 2, which is about 3,000-square-meters. And then we'll also be opening T28, which are the town homes above, which is kind of a nightlife concept. We also have the TriNoma expansion as well and then Evo City. So, so far on track.

Okay. My last question is on Arca South estate in particular. I mean I live close there. So I think the profile is a little different. Can you care to share like how it differs in terms of, I guess, a BGC or do you envision it to be the next BGC? I understand there's a lot of infrastructure at play right now.

I think with the success of BGC, obviously, that is an incredible peg. But I think what we are spending a lot of time thinking about is the identity of Arca itself. I think with the incredible transport infrastructure that's really going to be there from a very early stage, it gives us a fantastic platform to now start building ultimately the sort of stories of concepts that we sort of want. I think what's given us a lot of confidence is with the first phase of the mall launching, it's been a relative success compared to ultimately our original sort of plans and sort of budget. A lot of that really coming from the surrounding neighborhoods or sort of developments who've been extremely hungry for development in the area. And so I think it's a really just fantastic sort of platform to sort of build this new kind of on top of. The other aspect on the residential side of things, because of its proximity to the airport, it actually prevents us from building extremely high compared to what you would sort of see in BGC or Makati. That in itself is a very, very interesting, we think, sort of potential sort of benefit, especially for sort of the residents there. And so we really would love to lean into that a little bit more and really explore how to make it extremely sort of livable for the residents. But at the same time, again, that transport infrastructure from a commercial office leasing sort of standpoint, very, very interesting assets that we're keen to sort of explore a little further.

If I may add, Jaime, the take-up that we had in the second quarter was also based on a focus on Arca South. The opening of the mall helped a lot in terms of having more both buyer and seller focus. And I think I was quite excited with what Jaime talked about what's going to be happening on the estate side in the second half. It should help us in terms of helping move inventory in Arca South and our other estates.

Thank you, Mike. So a question from [ Carlos ]. May I ask what is the cancellation rate on residential property sector? And he was also asking about our 2Q launches.

So on cancellation rate, Carl, as of 2Q, we're still seeing it on..

Largely stable, yes, sorry, 7.6% from 7.2% in the first quarter of 2026. This is still lower -- marginally lower than where we were at in the first half of 2025. And then no launches for the second quarter of 2026. As Meean mentioned earlier, we will be guiding for or we are targeting about PHP 5 billion worth of horizontal launches in the second half of 2026. We also have questions from Jelline of JPMorgan. Number one is in [presales trend]. Can you please expound on the trend in presales across product types, locations and vertical versus horizontal for the initial months of June and July? Just wanted to get a sense of any shifts in sentiment around Middle East development.

Thank you Jelline. Second quarter, bulk of the transactions continue to be with the premium side. I think there -- that demand for that market continues to be resilient, especially in estates where there's a lot of promise of new -- like mall openings in Arca South and the things that are happening in Nuvali. So horizontal demand in those areas have been resilient. Admittedly, there's been some challenges related to the core market because they're the most affected by everything. Now I think moving forward, we'll continue to focus on where demand continues to be resilient to good. We're seeing opportunities in our estates in the South and also in Arca South. That's why I think as mentioned by our CEO and as mentioned by Joe, we're looking to launch around PHP 5 billion in the second half to address that demand. Jelline, happy to note also that we sold a Park Villas unit. So we're now 20 out of the 45 units. And in case you want to know, Park East Place is also 88% sold compared to 85% in Q1.

Thank you, Mike. A follow-up question from Jelline. Can I confirm that CapEx guidance is further lowered to PHP 60 billion from PHP 70 billion to PHP 80 billion last quarter? Let me just handle that one. Just to align everyone's expectations at the start of the year, we guided for PHP 70 billion to PHP 80 billion during our full year briefing. We lowered it to PHP 50 billion during our first quarter briefing, but now we have room to increase it to PHP 60 billion. So our guidance for the full year 2026 is PHP 60 billion. Okay. So our next question, again from JPMorgan. Can you please give us an update on the [RFO ] value and mix?

In terms of total RFO value, it's only 15% of our total inventory. And the good thing is none of these RFOs are in those areas where there's overhang in the market.

So that's about eight months' worth of inventory and about PHP 17 billion in terms of value. Our next question is from Paul Padit of BPI Securities. How much is your target resi launches? Again, for 2026, we're targeting PHP 5 billion. And so far for the first half of 2026, we haven't launched any. Our purpose really was to work down our inventory levels, which is now at 15 months for total and around three months for horizontal. The next question is for Mariana. Any color on office escalation rates and reversions for the second quarter?

Yes. So we actually -- so as context, about 14% of our office portfolio was up for renewal this year. We've secured just under 80% already and rolling into the first half of the year. Our reversions are looking at about mid -- about 5%, 6%, which we -- from what we hear is healthy relative to the market.

Thank you Mariana. On inventory value for the first half, can you give the breakdown on a per brand basis? Maybe this question for Mike.

I'm not sure if I have...

The inventory break. Well, we'll provide it in terms of premium and core. About 75% of our inventory is in the premium segment and about 25% is in the core segment. In terms of where we were at relative to pre-COVID, we're now better relative to pre-COVID, which is around 18 months versus our 15 months currently. Our next question is again from Jelline of JPMorgan. For [ Lureian ], can you please give updates on the buyer decision for the Lureian pause? How much is deferred, canceled or closest placement for other [ AI ] projects? And how is it represented in the 53.5% presales disclosed for the first half of 2026?

So around half have decided to stay with the project. So the other 50% continues to be in the GTU numbers of the company now from prior year.

Thank you, Mike. Again, in malls, you mentioned, Mariana, that you observed [ foot traffic growth ]. Can you give a sense of how much has slowed down us in terms of tenant sales and consumer spending?

Yes. So I think we reported a 7% same mall sales growth. In terms of foot traffic, we reported 5% growth. If you break that down, that we saw 8% growth in foot traffic for our premium malls and 3% for that of our core mall.

Follow-up question would be which types of tenants are currently outperforming and underperforming? And are you seeing any signs of consumer down trending or pressures on discretionary spending?

I think unsurprisingly, we saw some softness in supermarket sales, but other outperforming would be health and beauty, food unsurprisingly. Entertainment was relatively flat along with supermarkets.

Thank you, Mariana. The next question is [ Andressi ]. This one from Danielo Picache, AB Capital. How much further can inventory normalize by year-end and next year, given that you sound a bit more optimistic in terms of launches?

It's tough to predict. First, again, what we want to say in terms of our own second half targets, we have -- our view is we have enough inventory to keep peace, the PHP 110 billion in residential inventory should be enough. I think next year will really depend on overall market conditions. So it would be, I guess, too early to talk about it now.

And sorry, Joe, maybe just to add to what Mike is saying. In my presentation earlier, wherein I -- wherein we charted out the gross take-up numbers, the sales take-up numbers, that's actually excluding the paused project. So Lureian has been carved out from prior historical as well as this year.

Thank you, Jed.

Maybe if I can just add something on the question on the normalization of the inventory. So we're quite happy with the progress that we've made in terms of how much we've been bringing down inventory. We feel that in this market, it could go down further, which is why we're only launching around PHP 5 billion for the rest of the year. We think the second half is probably going to be more or less similar to the first half. There's still a lot of challenges ahead of us, and we are prepared to face these challenges. Meanwhile, we are also gearing up for more launches in 2027 and making sure that we're ready when the market turns. But I think for the rest of the year, we see that our inventory level should -- even if we launch that PHP 5 billion that we have planned, we should be ending the year with a lower inventory level than where we are today.

Thank you Meean. A follow-up question from Francis Padit. On inventory values for the first half of 2020 -- sorry, apologies. Given that you've been accelerating your project completion and deliveries, I just want to check in terms of unbooked revenues, how much is potentially recognizable for the balance of 2026?