Robinsons Land Corporation (RLC) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning, and thank you for joining us for our Second Quarter Analyst Briefing. As we continue to deliver solid performance in the first half of the year driven by our got execution and sustained stead across our diversified portfolio, reflecting the strength of our operation amid the challenging operation -- amid the challenging operating environment. Anyway, joining us today are our President and CEO, Ms. Mybelle Socorro V. Aragon-GoBio; secondly, Vice President and General Manager of Laws and Destination States Division, Mr. Faraday Go; our Chief Financial Officer, Mr. Kerwin Tan and the rest of the Investor Relations. Presenting with us today are Mr. Kerwin Tan and Mr. Ramon Rivero, Chief Strategist and GM of Robinsons Sports and Leisure. After the presentation, we will open the floor for Q&A session. Thank you. Before we proceed, I would like to draw your attention to this disclaimer. The information in this presentation is for informational purposes only. Certain statements here may be forward looking and after a result could differ materially due to various risks and uncertainties. Now let's start the presentation. Mr. Kerwin, you may begin.

Thank you. Good morning. Robinsons Land remains committed to strengthening its diversified portfolio and broadening its nationwide footprint through developments that support tenable Group and long-term value creation. During the quarter, additional workable centers were added to the pipeline, further expanding the company's flexible work experience offerings. During the half, Robinsons Land delivered solid financial results and sustained its growth momentum. RLC delivered strong first half results with consolidated revenues rising 10% year-on-year to PHP 25.42 billion, supported by solid contributions from both the investment and development portfolios. Operating profitability remained healthy with EBITDA increasing 8% to PHP 13.48 billion. Growth was tempered by higher TV expenses as the first half included a lower cost base in the first quarter of 2025 prior to the power rate adjustments, coupled with high commission expenses in line with increased sales recognition. Earnings momentum remained strong as net income expanded 12% to PHP 9.02 billion. The faster growth versus EBITDA was mainly driven by lower financing costs and reduced effective tax following the additional asset in vision into our CAR in the third quarter of 2025. Meanwhile, net income attributable to parent increased by 5% to PHP 7.21 billion. The comparatively slower growth was primarily due to the higher minority ownership in RCR, which increased to 44.33% following the block placements completed in January. Turning to our balance sheet. Total assets increased by 2% to PHP 281 billion as of the end of the first half, primarily driven by higher cash balances from strong operating cash flows and proceeds from the recent lock placement as well as the additional capital expenditures during the period. Total liabilities declined by 4% to PHP 86.87 billion, mainly reflecting the repayment of maturing bonds. This also brought interest-bearing debt down to PHP 33.57 billion. Meanwhile, total equity strengthened by 5% to PHP 193.87 million, while parent equity similarly increased by 5% to PHP 183.81 billion, largely driven by additional equity reserves recognized from the recent lot placement. Combined with a higher cash position, there is the reduction in debt, improved our net debt-to-equity ratio to 10.5%. And reinforcing the strength of RLC's balance sheet and conservative leverage profile. From a cash flow perspective, cash and cash equivalents of PHP 13.44 billion, supported by the successful PHP 7 billion block placement completed in January of 2016, alongside helping operating cash generation. During the period, we deployed PHP 7.53 billion in capital expenditures to support ongoing developments and expansion initiatives, while generating positive free cash flow of PHP 8.02 billion. RLC delivered a strong first half, building on its full year momentum. Consolidated revenues reached PHP 25.42 billion, representing a 10% year-on-year increase driven by strong performance of both our investment and development portfolios. EBITDA grew by 8% to PHP 13.47 billion with growth moderating relative to revenues mainly due to higher ability costs as the first half 2025 included a lower cost base in the first quarter prior to the power adjustments, coupled with higher commission expenses in line with increased sales recognition. EBIT grew by 8%, consistent with EBITDA growth, supported by a slower increase in depreciation from newly operational assets. Meanwhile, net income increased by 12% to PHP 9.02 million outpacing EBIT growth, mainly due to lower interest expense and a lower effective income tax rate following the infusion of additional assets into RCR during the third quarter of 2025. Net income attributable to parent grew by 5% to PHP 7.21 million. The more moderate growth relative to operating performance, was mainly due to higher minority interest in RCR, which increased to 4.33% this year from an average of 35% last year. following the subsequent block placement completed in January. On a quarter-on-quarter basis, revenues increased by 7% and EBIT grew at a more moderate pace of 4% and 5%, respectively. This is mainly due to the higher sales commissions associated with the increase in realized sales. Meanwhile, net income attributable to the parent increased by 4% quarter-on-quarter, supported by lower interest expenses and a lower effective income tax rate following the previously mentioned asset infusion into RCR. RLC maintained its low debt level from year 2025, with total debt of PHP 33.69 billion. Lower debt base was achieved through -- supported by strong positive operating cash flows and additional liquidity generated from block placement proceeds. Around 67% of the borrowings are fixed rate providing stability against interest rate movements where 33% are floating rate. The portfolio cancers of PHP 18 billion in bonds and PHP 15.7 billion in long-term bank loads with an effective interest rate of 5.7% and a weighted average maturity of 1.7 years. Overall, as continues to maintain a healthy and manageable debt profile supported by strong cash generation and disciplined capital management. RLC's portfolio remains strategically acquired on its investment portfolio, which continues to be the company's primary driver of revenues and earnings. For the first half, the investment portfolio contributed 72% of consolidated revenues and accounted for 18% of at 82% and 77% of consolidated EBIT and EBIT, respectively. The Malls division remained the largest contributor with the investment portfolio. More revenues increased on the back of stronger consumer spending and sustained tenant activity with same rental growth of 4% year-on-year alongside contributions from newly opened Pagadian Mall and Bagong Silang Town Square, as well as higher amusement revenues, and EBIT growth was moderated by higher power rates and by additional depreciation from the new malls. Meanwhile, the development portfolio accounted for the remaining 28% of consolidated revenues and contributed 18% and 23% of consolidated EBITDA and EBIT, respectively, driven mainly by the group's organic residential projects. and its share in net income of the joint ventures. Residential revenues increased mainly as more contracts from prior years reached the equity threshold coupled with higher percentage of completion recognized from ongoing projects. EBITDA EBIT grew at a faster base than revenues due to lower general and administrative expenses, sustaining the positive momentum of the development portfolio. A more detailed discussion of each business unit's performance will be presented in the succeeding slides. RCR are continues to play an increasingly significant RLC's consolidated financial performance, supported by its expanding portfolio and growing recurring income base. During the first half, RCR generated PHP 6.8 billion in revenues, accounting for 27% of RLC's consolidated revenues. EBITDA increased by 43% year-on-year to PHP 5.73 billion, while net income rose by 39% to PHP 4.98 billion, mainly driven by the infusion of 9 malls completed last year, which further expanded RCR's income-generating capacity. Net of minority interest, RSR contributed approximately 44% of RLC's income -- net income attributable to the parent, highlighting its growing importance within the group's earnings mix. As of the first half of 2026, our RCR's portfolio now consists of 38 premium assets composed of 17 office properties and 21 malls across 25 strategic locations, with total GLA reaching 1.15 million square meters. Portfolio occupancy remained strong at 19%, while weighted average lease expiry or stands at 4.3 years. In tenants of tenant mix, retail tenants account for 47% and BPOs of 46%, with the balance coming from traditional offices and seat leasing, reflecting a well-diversified interstatement tenant lease. During the quarter, the board also approved the infusion of additional 6 malls, which will further expand the portfolio and provide additional recurring income. Overall, RCR continues to be a contributor to RSC's recurring income and serves as a strategic platform for future asset monetization and capital set with a peer pipeline for continued portfolio expansion. I now turn you over to Mr. Ramon Rivero for the operational highlights for business units.

Thank you, Mr. Kerwin Tan, and good morning to everyone in the call. Starting with malls. Our mall segment continued to deliver solid results in the second quarter, with revenues reaching PHP 5 billion, up 5% year-on-year supported by rental revenue growth and healthy mall traffic. This lifted first half revenues to PHP 10 billion, up 6%, while EBITDA and EBIT increased to PHP 6 billion and PHP 4.1 billion, respectively, highlighting the strength of our recurring income base and retail platform. We also maintained a strong 94% occupancy rate ahead of the industry average of 92.3%, reflecting the quality of our assets and continued tenant demand. Robinson Malls now operates approximately 1.7 million square meters of leasable space, demonstrating the enduring relevance of our malls and the resilience of consumer spending across our network. Moving to our Office segment. The business continued to provide a stable source of recurring income in the second quarter with revenues reaching PHP 2.2 billion, up 5% year-on-year, supported by sustained demand from BPO tenants, healthy lease renewals and improving occupancy. For the first half, revenues grew 6% to PHP 4.37 billion, while EBITDA and EBIT increased 5% to PHP 3.43 billion and PHP 2.79 billion, respectively. The segment's performance underscores the resilience of our office portfolio and the strength of our tenant base despite a dynamic operating environment. Occupancy improved further to 87% from 86% in the first quarter, reflecting successful leasing initiatives while remaining above industry levels. In total, our office portfolio spans close to 900,000 square meters of gross leasable area with 34 office buildings. During the second quarter, we completed our second workable center at GBF Center 1 in Bridgetown, Quezon City, exclusively serving Go Tan. This addition expands our network to 17 centers and increases total capacity by over 400 seats, bringing our overall seat count to more than 4,400. Complementing our commercial portfolio, our hotel segment continued to deliver strong results during the period, driven by the growing contribution of Fili and NUSTAR, together with the sustained strength of our international hotel brands. In the second quarter, hotel revenues increased 7% year-on-year to PHP 1.69 billion, while EBITDA grew 16% to PHP 544 million. For the first half of 2026, revenues reached PHP 3.41 billion, up 10% from the same period last year, while EBITDA and EBIT increased 13% to PHP 1.08 billion and PHP 588 million, respectively. The segment's continued growth reflects the benefits of our strategic shift toward higher-yield hospitality assets, which continue to enhance both revenue quality and profitability. Operationally, our 27 owned hotel assets comprising over 4,000 room keys, maintained a stable system-wide occupancy rate of 65% during the period. Our Logistics segment delivered another quarter of healthy growth. Second quarter revenues increased 60% year-on-year to PHP 292 billion, while EBITDA and EBIT grew 69% and 101% to PHP 268 million and PHP 200 million, respectively. The strong year-on-year growth reflects a combination of the continued contribution from our logistics assets and a relatively softer operating base in the comparable period last year. For the first half, revenues grew 25% to PHP 561 million, while EBITDA and EBIT increasing 27% and 35% to PHP 517 million and PHP 405 million, respectively. RLX portfolio comprises 15 industrial facilities with approximately 320,000 square meters of gross leasable area, providing a solid platform for the segment's continued growth. Moving to our residential segment. Demand remained healthy during the period with net sales from both our organic and joint venture projects reaching PHP 5 billion in the first half, up 32% year-on-year. Our inventory remained broadly stable at PHP 44.2 billion, while standby revenues stood at PHP 42.4 billion, providing a healthy pipeline for future revenue recognition. Supported by higher construction progress and revenue recognition across our residential developments, second quarter revenues grew 11% year-on-year to PHP 3.08 billion, while EBITDA reached PHP 684 million. For the first half, revenues increased 23% to PHP 5.81 billion, while EBITDA and EBIT rose 24% and 25% to PHP 1.44 billion and PHP 1.36 billion, respectively. Our joint venture portfolio delivered a strong second quarter with equity earnings increasing 48% to PHP 548 million. This brought first half equity earnings to PHP 729 million, up 3% year-on-year, reflecting continued contributions from our key development partnerships. Our Destination Estate segment delivered a strong rebound in the second quarter with revenues rising 45% year-on-year to PHP 352 million. EBITDA and EBIT likewise increased by 56% and 51% to PHP 227 million and PHP 218 million, respectively. And for the first half, revenues reached PHP 510 million, while EBITDA and EBIT totaled PHP 309 million and PHP 290 million, respectively, supported by higher project completions and revenue recognition from our joint venture developments. Robinsons Sports & Leisure or RSL, previously introduced as Robinsons Sports Entertainment and Recreation is RLC's newest business unit focused on active recreation, leisure and entertainment experiences for Filipino communities. As part of our ongoing expansion, we are set to launch several new concepts in the fourth quarter of this year, including GX Sports, which will introduce high rocks and pickleball experiences across our Galleria network and Helios Beta, a tournament-grade pickleble facility in Bridgetown. These initiatives support our strategy of creating differentiated lifestyle destinations that promote active living, strengthen community connections and drive overall customer engagement across our portfolio. Capital expenditures reached PHP 7.5 billion during the period, up from PHP 5.7 billion in the same period last year, even without significant land acquisitions. The higher spending reflects the company's continued commitment to executing its growth strategy and advancing key projects despite ongoing industry challenges. We are on track to significantly expand our portfolio through 2030 under our Vision 525/50 strategy with malls reaching 2.4 million square meters of GLA, offices growing by over 50% to 1.28 million square meters of GLA, logistics more than doubling to 600,000 square meters of GLA and our hotel portfolio will likewise grow with room capacity increasing by 35% to 5,681 keys. Before I conclude, let me provide an update on several key initiatives that will support the next phase of growth across our recurring income portfolio. In malls, we continue to invest in redevelopment and enhancement projects at Robinsons Galleria, Robinsons Manila and Robinsons Dumagete. These initiatives are aimed at further improving the customer experience, strengthening asset quality and ensuring our malls and competitive for the years to come. In Offices, we are laying the groundwork for future growth. The Jewel at Mandaluyong City has already secured tenancy from one of the country's largest BPO companies, while Cybergate Dumagete is nearing completion and will further expand our presence in key outsourcing markets. For logistics, we remain focused on expanding our footprint to meet the evolving requirements of logistics and e-commerce occupiers. Key developments include the FedEx Regional Hub in Clark, which will add over 70,000 square meters of GLA upon completion as well as the continued expansion of our Montclair facility. Meanwhile, in hotels, we are strengthening our hospitality platform through the upcoming openings of Fili Hotel Bridgetown and Summit Siargao Villas in 2027, all further enhancing our presence across both business and leisure destinations. While geopolitical and macroeconomic uncertainties remain, we continue to approach growth with discipline and conviction. We remain confident in the long-term fundamentals of the Philippine economy and believe that continuing to invest today positions us to capture future demand and create lasting value for all our stakeholders. As others take a more cautious approach, we remain focused on executing our pipeline and building high-quality assets that will strengthen RLC's competitive position for the years ahead. Turning to RCR. RLC continues to maintain a substantial asset base that we support RCR's long-term growth and diversification. RLC retains a substantial portfolio of malls, offices, logistics facilities and hotels that may support future infusions into RCR. Beyond the existing portfolio, its development pipeline of over 1.5 million square meters of GLA and more than 1,000 hotel room lease provides additional long-term growth opportunities, subject to asset completion, stabilization and RCR's investment criteria. For this year, RLC is also evaluating a potential asset infusion into RCR from its existing portfolio. The timing, asset composition and transaction size remains subject to final evaluation, regulatory approvals and the requirement that any transaction be yield and dividend accretive to RCR shareholders. We all look forward to building on this momentum and delivering continued growth across RLC and RCR. This concludes our presentation. Thank you very much. We are now open to your questions.

[Operator Instructions] The first question comes from Jelline Gaza.

My first question is on your malls business. I noticed that mall revenue growth slightly slowed a bit around 5% growth year-on-year in 2Q. Can you shed some light about tenant sales foot traffic as well as consumption trends that you're seeing maybe across your portfolio? Is there a differentiated trend between Metro Manila malls versus provincial locations?

For the first question, regarding the mall revenues. So I think 2 things. One is seasonally, the second quarter is lower than the first quarter. And secondly, we shorted mall hours for a few months this year due to the power energy situation. So it slightly affected the foot traffic at that time. But we've already reverted back to normal operations, normal mall hours.

Your second question?

Do you have a figure for mall SSSG, just to close it out.

Mall, sorry, SSG same sales growth. It's -- for the first half, it's up 1% basically, same was -- same-store sales growth.

Okay. First half, half. So does that mean that 2Q was a decline?

There were some months with the rates and the shorter mall hours. decline, but then it's steady at 1% for the first -- second quarter.

Understood. Second question is on residential presales. So for both RLC branded and JV on a quarter-on-quarter basis, it seems like it slowed down a bit. Can you share some information about how you see this trend? Has there been a change in your own strategy, payment terms or other competitors might have been more aggressive? Is it because of timing of completion? Any other insights on this and how we should think about this figure going forward will be most helpful.

This is the first quarter or first half?

First half. 2Q was slower than 1Q. So any insights on the trend and outlook...

Sorry. In terms of our revenue recognition, actually, second quarter is actually higher than the first quarter. Presales...

Was referring to presales, sir?

Presales is down compared to -- for the second quarter.

Yes. Second quarter is more timing because a lot of our international marketing campaigns were loaded towards June. So a lot of those sales are just coming in -- came in July. So those should be reflected in the third quarter already. But then P2C,re's also high growth in the JV sales, so amounting to PHP 3.6 billion consolidated. So net sales are actually up as with the recognized revenues.

Okay. Lastly is on office. From what I recall, office GLA last year was up double digits, around 11% to 12% and yet residential -- sorry, office revenues for first -- for second quarter was only up 5%. Can you comment on rental reversion trends and an update on lease out for the newly added office space and what you are seeing on the demand across BPO traditional tenants?

So I think -- to answer your questions in terms of demand, we're still seeing BPO as the main source of take-up, although we also see strength in seat leasing with our own work table and also with our -- with other brands, they've been picking up a lot of space. I think it's because of the high demand on the OpEx model or flexible workspaces. I think the single-digit growth is more on basically more on escalation. We're starting at a lower base in the year prior to that, hence, the double-digit growth previously.

So on rental reversion on a portfolio-wide basis?

There is some -- especially on the renewals. We've really made a point that occupancy is more important. So we've been giving some incentives, some slight reversion. I think last year, we were at 2% to 5% rent reversion. So low single digit. We just really want to keep the tenants more.

If last year, it was 2% to 5% positive, do you have a sense what it is this year.

2% to 5% negative.

[Operator Instructions] Another question, there's one question from first one from CPI, Francis?

I have 2 questions. So first on RCR. You've released disclosure earlier, I think, last month about your upcoming infusion of 6 malls, if I'm not mistaken. Can you provide any guidance on the booking of these malls?

The revenues for these malls will start to accrue in the first month of third quarter 2026.

First month of?

July.

Got it. My next question is again on RCR. Can you provide the voice BPO, if you have figure for both RCR and RLC? How much of your total GLA were voice BPO?

For voice BPO for total RLC, it's around 30% only.

How about for RCR?

I don't have the breakdown right now, but more of it's around 30% for entire portfolio.

Got it. And my last question is on unbooked revenues for the residential segment. How much of your current unbooked revenues were -- of that PHP 42 billion were carved or were expected to be recognized for this year for the remainder of the second half or for the second half of 2026?

We don't usually provide forward guidance, but approximately about conservatively about PHP 4 billion for the end of the year PHP 4 billion additional.

Next question will be coming from Raffy Mendoza from Maybank.

My first question is on the residential segment, particularly the rise in JV net sales take-up. Can you provide more color on specific projects that were doing quite well in the second quarter?

So there are 2 projects in particular for our joint ventures that did particularly well. First is our joint venture with Shangrila, specifically the Aurelia and BGC. As we commenced the turnover of the project, we saw a spike in additional sales. And then the same is going for our other joint venture with Hongkong Land, particularly the Velaris Project. As it nears completion, we also saw a spike in sales for both towers that we launched there.

Okay. My next question is on RCR. Does RCR have annual AUM targets or even GLA infusion targets like the other REITs. I understand that you already have one announced this year, the PHP 10.6 billion consisting of 6 malls. Do you have targets moving forward for the next 3 years at least?

Actually, we don't have annual targets for RCR as the infusions from the sponsor will actually depend on the amount of block placements that we -- that the sponsor is able to raise because it's by a property for shares. So we need to create elbow room without reaching the minimum public ownership. But just to put things in context on an overall picture of RCR, on an investment EBITDA of RCR '21 projected to be plus or minus PHP 21 billion for the end of 2026, 55% of it is contributed by RCR. So technically, there's about 45% or PHP 9.4 billion of EBITDA from the sponsor to grow. So if you look at it on a bigger picture, there's a potential to approximately still double our RCR size.

Next question will be coming from Carl Sy, Regis.

Let me just check if you can hear me.

Yes, we can hear you.

So I'll just clarify a couple of things that Jelline asked earlier. So first, on the office segment, it was mentioned that negative rental reversions for the portfolio were 2% to 5%. So I'd like to ask if that was broad-based? Or are there some areas where negative rental reversions are more negative, maybe negative 10% or maybe there's an area which is particularly strong where you're seeing positive rental reversions of 5%. Yes. So the background on the negative rental reversions.

Yes. Carl, so we're basking that from the 100,000 square meters of expiring leases this year. We've actually renewed around 67%. So on the -- it mainly remained flat, some decline. There's also some that increased. So averaging out negative 2%, negative 5% right now. We hope to improve by the end of the year with the remaining 30%.

Okay. So let me clarify though. There's no particularly weak area or no particularly strong area. A lot of them are close to flat or just slightly negative, slightly positive. Is that fair?

Yes. Yes, that's fair.

Okay. On the mall business this time, clarify again the mall SSSG of 1% in 2Q. And in particular, I believe this was 4% in the first quarter. So it declined -- decelerated to 1% in 2Q. Now mall revenue grew 5% in 2Q. You're saying SSSG is 1%. I want to clarify if -- I don't think floor area expanded that much. Is -- should I be thinking in terms of maybe same mall revenue growth, which is different from same-store sales growth? Because I don't know how you can get to 5% mall revenue growth on just 1% same-store sales growth. Or am I mistaken? Because as far as I know, didn't expand that much.

Just to clarify different metrics. Just one same mall sales growth, 1%. But in terms of same mall revenue grew, it's actually 4%.

Okay. So let me clarify that I recall a 4% number also in the first quarter. So is it correct that both first and second quarter, it was 4% same mall revenue growth?

Yes, that is correct.

Got it. That clarifies a lot. let me write down. Now on the residential segment this time, so sales are -- well, certainly much weaker than, let's say, pre-COVID period. That's understandable. In terms of what we are seeing recently, is it fair to say that RFOs are -- for the stand-alone projects, are RFOs selling much better than a project that's not yet complete?