Debt watcher retains top rating for ALI bonds

A DEBT WATCHER yesterday announced it was keeping its top rating for proposed and outstanding bonds from Ayala Land, Inc. (ALI) due to the company’s reportedly well diversified nature and strong capitalization.

The interior of the Tower One & Exchange Plaza in Makati City, headquarters of Ayala Land, Inc. is seen from the lower floors. Philippine Ratings Service Corp. has retained its top rating for the listed developer’s proposed and outstanding bond issuances. -- Photo By Jonathan L. Cellona

Following a recent review, local credit ratings agency Philippine Ratings Service Corp. (PhilRatings) retained its outstanding “Prs Aaa” score for Ayala Land’s proposed P5-billion bond issuance, as well as its outstanding bonds worth P4 billion, the press statement showed.

“The ratings reflect the following factors: Ayala Land’s well-diversified portfolio complemented by solid brand equity and a highly-experienced management team; sound profitability coupled with strong cash flow generation and cash reserves, and conservative capitalization with ample room for additional debt,” PhilRatings said.

Last month, the real estate firm said it was issuing the multi-year bonds worth P10 billion in order to fund general capital expenses. This comes on top of an earlier P4-billion bond issue first issued back in 2008.

In the meantime, the company announced last week that it was earmarking as much as P60 billion -- its biggest investment in a single area yet -- to develop six districts within Makati City, the country’s so-called financial capital.

Ayala Land has allotted a record P37 billion in capital expenditures this year alone to fund new residential and leasing projects, as well as for the acquisition of new properties moving forward.

This amount will be partially sourced from seven- and 10-year corporate bonds worth P15 billion that were issued last month, earlier reports said.

Ayala Land hiked its net income for 2011 to a record P7.14 billion versus P5.46 billion it generated in 2010, while total consolidated revenues rose by 17% to P44.21 billion from P37.8 billion two years ago.

Total expenses last year grew by 12% to P33.50 billion in 2011 from P29.95 billion, year on year.

“Indications are strong that the growth in profitability will continue in the medium-term given the current favorable industry and general economic environment,” PhilRatings noted.

philippinerealestatenews.blogspot.com

JG Summit to ramp up spending this year for expansions

 LISTED CONGLOMERATE JG Summit Holdings, Inc. is ramping up capital spending this year in line with expansion plans in place for its real estate and aviation units, an official said.

The Gokongwei-led firm has pegged capital expenditure at P52.87 billion for 2012, up 79.89% from the P29.39 billion spent in 2011, Bach Johann M. Sebastian, JG Summit senior vice-president and corporate planning head, told Business World in an e-mail.

A bulk of JG Summit’s will be accounted for by the company’s real estate arm Robinsons Land Corp. and low-cost airline operator Cebu Air, Inc., Mr. Sebastian said.

Robinsons Land will be spending P19.25 billion this year, a 73.74% increase from the P11.08 billion spent last year, the e-mailed data showed.

Robinsons Land, which hiked its full-year net profits by 10% to P3.97 billion last year, earlier said it will be sourcing its capex from cash operations and debt, with more than 60% of the funding going to malls, office buildings, and hotels, and the remainder for condominiums and other housing units.

Cebu Air, for its part, nearly tripled its budget to P12.50 billion this year versus only P4.22 billion last year.

“Funding for Cebu Air will contribute to the growth of its fleet acquisitions this year,” Mr. Sebastian said in a separate telephone interview.

Cebu Air, which operates budget carrier Cebu Pacific, aims to expand its fleet to 47 aircraft by the end of 2014 in line with plans to embark on long-haul flights within the year.

Other JG Summit units, particularly its unlisted petroleum and banking firms, will also ramp up spending this year.

JG Summit Petrochemical Corp., the unlisted petroleum subsidiary of JG Summit, has pegged its 2012 budget at P15.54 billion, up by 88.82% from P8.23 billion in 2011.

JG Summit Petrochemical aims to open the country’s first naphtha cracker raw material factory in Batangas City in the third quarter next year, in a bid to drive down raw material production costs according to earlier reports.

Robinsons Bank Corp., for its part, will be spending P390 million this year, more than double the P190 million figure earmarked in 2011.

Listed food and beverage firm Universal Robina Corp. will be spending P4.56 billion this year, unchanged from its last year’s capex.

JG Summit, established in 1990, is the Gokongwei family’s holding company for various interests. JG Summit shares were traded unchanged on Friday at P28 apiece. -- Franz Jonathan G. de la Fuente.

www.bworldonline.com

M & A CONSTRUCTION AND DEVELOPMENT

M & A Construction and Development Company is the construction and real estate development division of the M. Lhuillier Group of Companies. It was established in the early part of 1996 as the contracting and construction arm of the new sites of ML Pawnshop and Jewelry Stores nationwide especially in the Visayas and Mindanao areas. Estimated number of employees reached 110 skilled workers including office personnel.

In the early months of operation, M & A Construction has constructed hundreds of new pawnshop branches and jewelry stores. During the first quarter of 1996, Mr. Panfilo F. Elma, the Chief Financial Officer of the business conglomerate and presently the company’s general manager, proposed the idea of a residential subdivision with a combination of high-end, middle-class and socialized housing units. The initial P10M investment made the company sustain its operation in the succeeding years.

Pioneer projects are the Sta. Monica Homes and Charle’s Peak Subdivision situated at Lapu-lapu City and Mandaue City respectively, with 160 total units combined. The company is also tasked for the land development, house construction, renovation, repair works of the M. Lhuillier Group real property holdings like Las Palmas in Danao City, Club Pacific in Sogod, Cebu and several northern town properties.

One of the main concerns of the company is to contribute its share in alleviating the housing shortage in the Metro Cebu area by increasing the accessibility of home ownership and improved housing facilities among the middle and low income group. Top management is considering other properties available for this purpose in the near future.

www.mlhuillierinc.com

Lhuilliers plan P100M park investment

AFTER allotting some P70 million as initial investment for the development of Cattleya Gardens and Memorial Park, the M. Lhuillier Group will be spending an additional P100 million for the completion of the project, which is due next year.

In a press briefing yesterday, Michel Lhuillier, president of the M. Lhuillier Group of Companies, said that Cattleya is one of the latest and biggest real estate developments of the company in Cebu, and is positioned to provide affordably-priced memorial park lots.

 “We have been building properties for the living, so why not also build beautiful homes for our departed loved ones?” Lhuillier said.

Cattleya Garden is a 5.4-hectare development located in Cordova, Mactan. It sells 12,728 lots of various types. Cattleya is also the first to offer a park cemetery in Cebu.

According to Cattleya sales and marketing manager Maria Lovena Ordaneza, the company has already sold some 500 lots worth P31.7 million since it opened its pre-selling program last March 6.

Cattleya targets the ABC market. “Our competitive advantage is that we are offering various product types for Cebuanos to choose from, on top of the amenities we are going to feature inside Cattleya,” Ordaneza said.

Cattleya’s various lot products include lawn lots, designed for underground internment and priced at P75,000 to P85,000, and the wall niche that can house 710 outdoor niches remains priced at P67,000 to P73,700. Places in the bone ossuary cost P51,000 to P56,100; the cinerarium, designed for those families who have not yet finalized their permanent memorial plans, will go for P41,000 to P45,100. Places in the pet memorial are priced at P21,000 to P23,100.

Cattleya also offers garden lots, where families have the option of building an 18-inch-high granite monument with 25 percent of the lot. Garden lots are priced at P1.1 million to P2 million. Families may also choose Cattleya’s biggest size, the family estate, with a regular lot size of 37.5 square meters. Its price ranges from P2.1 million to P3.9 million.

Among the amenities to be developed at Cattleya are an orchidarium, playground, central pond, multi-purpose hall, animal habitat and pocket garden and meditation area.

“We wanted to develop this not just a memorial park, but a place where families can enjoy and have a deeper sense of connection with their loved ones,” Lhuillier said.

The Cattleya is Lhuillier’s third biggest project in real estate so far. The company ventured into residential developments in 1997, building Charles’ Peak Subdivision and Sta. Monica Homes located in Lapu-Lapu City and Mandaue City, respectively.

Lhuillier said the company will launch more projects in the coming years, including the development of properties in Carmen, Sogod and Talamban into mixed-used commercial properties.

The M. Lhuillier Group is into various businesses such as financial services, food, and pawnshops, among others.

www.sunstar.com.ph

Aboitizes overtake Ayalas

SPY BITS By Babe Romualdez


It is now confirmed, the Aboitiz family’s Aboitiz Equity Ventures (AEV) is now bigger than the Ayala Group’s (AG) holding company. Market capitalization of the PSE-listed AEV is at P277.75 billion, higher than Ayala Corp’s P244.197 billion. Despite a higher market cap, however, AEV is trading only at 13.18 times price earnings ratio or PER, compared to AG’s PER of 20.93 times – which could only mean that AEV is still cheap compared to Ayala, the same source disclosed.

Last year, Aboitiz Equity Ventures posted a net income of P21.068 billion while AG posted a lower netincome of P11.665 billion. Many find it interesting to note that the Aboitiz holding company was able to overtake the Ayalas’ net earnings, but those in the know attribute this to the Cebu-based family’s power company whose contribution to the net income has been described as “enormous.” AEV is currently the second most valuable PSE-listed holding company next only to Henry Sy’s SM Investment Corp.

Residential condos driving real estate profits

Leading securities and investment firm ATR Kim Eng (which is now known as Maybank ATR Kim Eng following Maybank’s acquisition last year) forecast an increase in real estate sales this year to P19 billion, up from last years P16 billion. Net profits are predicted to reach P4.9 billion for 2012, higher than 2011’s P4.18 billion – with the sale of residential condominiums identified as the growth driver.

That’s very good news for Henry Sy’s SM Development Corp. (SMDC) – which was named top condo developer with 22-percent market share in Metro Manila. In the last eight years, SMDC booked an estimated P36 billion in real estate sales from its existing and past projects out of the total estimated P64 billion. The company posted over P4 billion in profits for 2011, up 38 percent from 2010 figures of P3.02 billion. ATR adjusted its previous profit forecast for SMDC after incorporating possible sales contribution from the developer’s new residential projects with an estimated total sales value of P27 billion in the next four to five years. The new profit forecast is now P4.9 billion, almost nine percent higher than ATR’s previous projection and 18 percent higher year-on-year.  

Maybank ATR’s vast network of offices in Asia makes it a significant regional force in the area of investment banking, offering a wide range of services that includes corporate finance, investment banking, venture capital and private equity, research, corporate finance advisory and asset management services.

Orange revolution

No – this item has nothing to do with the political protests that rocked Ukraine in 2005 due to massive election fraud – but the potential “revolution” workers might stage after being fired by a law firm in Florida. Apparently, the employees were set to join an after-working-hours event in New York to celebrate payday and decided to wear the same color to easily spot each other in the crowd. The color coding scheme convinced management that the workers were staging a protest – which resulted in their immediate sacking with no due process and no severance pay given them.

Florida is known for its orange juice exports and prides itself for being the “Sunshine State” – but there’s nothing sunny about the unceremonious sacking of the employees. Apparently, Florida is what is called an “at-will” state – meaning the state law allows employers to fire anyone for any reason, whether it is a good reason, a bad reason or even the wrong reason, as long as no legal violation are made. Ironically, the orange loving employees would have stood a very good chance of fighting out their termination had they been wearing the color as a form of protest – because that would have made their sacking unlawful.

Spy tidbit

Powerhouse business group Philippines Inc. held its annual conference the other day at the Tower Club in Makati, with Philippines Inc. chairman Tonyboy Cojuangco and its president Tony Lopa – both of whom are relatives of President Noynoy Aquino. PNoy who confirmed his attendance as guest of honor and speaker for the conference, was unavailable at the last minute due to “pressing matters” in Malacañang.

Several Aquino Cabinet officials attended the conference, among them Trade and Industry Secretary Greg Domingo (who read P-Noy’s speech), Board of Investments chief Tito Panlilio; Tourism Secretary Mon Jimenez and Foreign Secretary Albert del Rosario who arrived late due to a meeting with the deputy prime minister of Chechoslovakia who we are told intends to run for president of the Chech Republic.

The conference was well attended, with no less than presidential special friend Grace Lee hosting the event.

www.philstar.com

Real estate startup offers 'Zocial' platform, buyer rebates

Before forming ZonicRealty.com Inc., founder and CEO Eric Eckardt served as founder and president of Empire Home Realty Inc., a brokerage based in Sarasota Springs, N.Y. That company was acquired in 2009by Hunt Real Estate ERA, where Eckardt served as general manager and partner until November 2011.

The following is a Q-and-A with Eckardt:

Q: What idea launched the company?

A: After selling my independent brokerage firm, which I founded in 2004 to a nationally ranked Realogy brand in 2009, and then managing that "traditional" model over two years, my thoughts were validated that our industry is going through a necessary correction.

Specifically, social media technology has redefined our industry, while consumer behavior has changed (and) traditional firms were trying to justify their relevance.

Therefore, I wanted to launch a brokerage, ZonicRealty, that would leverage every medium while ... utilizing an online platform and an "in-house" social platform, Zocial.

This, combined with assembling a strong leadership team with proven business development experience, allowed me to finally launch ZonicRealty.com with an aggressive growth strategy to scale quickly and disrupt traditional markets.

"Zonic" was chosen because we believed it was "futuristic" and resembled technology, versus a typical name like John Doe Brokerage.

Q: What are the major products and services offered by your company, and the cost of these products and services?

A: (ZonicRealty offers) real estate brokerage services, providing significant cost savings per transaction through buyer rebates and a lower commission structure for homebuyers and sellers, respectively.

The commission rebate is for buyers, where we rebate 20 percent back to the buyer at closing. (Sellers) can list (for) as low as 4 percent (commission) while still receiving maximum exposure and professional service. 

Q: What is the company's core business model?

A: Our core business model is a residential, consumer-centric real estate brokerage utilizing an online platform that leverages social medial and technology. Our business model generates revenue (gross commission income) through buyer and seller representation.

We offer buyer rebates to consumers to qualify and save thousands on the sell side while offering them a wealth of services, including an aggressive online marketing campaign for each respective home. Our sources of revenue will be through ancillary partnerships, although our primary source of cash flow is gross commission income.

Q: What makes the company's product and service offerings unique?

A: ZonicRealty.com's product and service offering is unique due to the following attributes:

·         Social platform, Zocial (derived from the word "social" and "zonic," hence "Zocial"): inspiring collaboration between all market participants (and) links to Facebook. We are steering our ... homeowners to post about their home, neighborhood, schools, etc., from their perspective -- encouraging collaboration and market insight.

·         Buyer rebate: offering the opportunity to earn 20 percent back at closing with no diluted requirements (such as a minimum commission) or fine print.

·         List online: Sellers can list online through our website, creating efficiency and minimizing a traditional role in the process.

·         3-D virtual environment: Through our intranet site, ZonicCloud, our agents can collaborate through (an online virtual) environment across all markets.

·         Leadership: Proven real estate professionals that have business development experience at the executive level.

·         Paperless transactions: Our agents can manage their business (and) deals in the "cloud" through our platform.

·         Scale: In seven weeks, we (were) in three separate markets in Long Island, Syracuse and the Greater Albany Capital Region in New York state, with Florida pending in the Tampa-Sarasota region. (In) other markets we have secured partner agents in advance of our formal launch(es).

·         Disruptive: We are targeting "traditional markets," providing consumers with a viable option.

Q: As the founder, what is your background?

A: I started my career on Wall Street in investment banking, where I worked for more than eight years, providing senior bank financing for acquisitions, leveraged buyouts, and general working capital needs for Fortune 500 and middle-market companies.

After departing investment banking in 2004, I launched an independent real estate and mortgage company that I ultimately merged into a joint venture with one of the leading real estate firms in the country in 2009.

I stayed with this company (Hunt Real Estate ERA) as the general manager and partner for our region in New York state growing revenue by more than 400 percent in less than two years by executing organic and acquisition initiatives. (I) departed ... this traditional firm in November 2011 to launch ZonicRealty.com.

I've also been involved in several other startups since 2004, including a crowd-funding platform for small businesses and entrepreneurs.

Q: What is the amount of outside funding received to date?

A: ZonicRealty.com is self-funded, although (I) had preliminary exploratory conversations with (a) venture capitalist and angel investor regarding an equity injection to accelerate our growth initiatives. As the sole shareholder, I'm on the fence with regard to diluting my equity position with a (venture capital firm), unless it is a strong strategic partner.

Q: Is the company profitable now? If not, when is it projected to reach profitability?

A: No, although our break-even will be within the second quarter of operations, given our pipeline of business and low cost structure (no brick and mortar).

Q: What are the company's growth plans for the current calendar year?

A: Outside of penetrating several markets in New York state, which we already did within two months in Syracuse, Albany and Long Island, we are launching in Florida and several other states.

Q: Which technology trends and market trends is the company watching most closely?

Outside of specific technology, we are focused on consumer behavior.

Q: What new products, product features and services is the company investing in most heavily?

Social media and technology.

Q: Any upcoming releases/developments?

A: ZonicRealty Inc. is launching in Florida around April 1, pending application status, in addition to other markets outside of New York state. Again, we are currently conducting business in Syracuse, Long Island and the Greater Albany Capital Region in New York state, with teams in place carrying our flag, ZonicRealty.com.

http://www.inman.com

Clive Thompson on the Power of Introversion

• By Clive Thompson
• Email Author 
• March 21, 2012 
• 12:34 pm

Guy Kawasaki, by all appearances, seems like an outgoing guy. A former Apple “evangelist,” he’s an omnipresent voice online, blogging his ideas about entrepreneurship and tweeting 40 times a day to his half-million followers.

But a few years ago he posted a surprising 140-character revelation. “You may find this hard to believe,” Kawasaki wrote, “but I am an introvert. I have a ‘role’ to play, but fundamentally I am a loner.” His followers were gobsmacked.

You can understand their confusion. As Susan Cain points out in her much-discussed new book, Quiet: The Power of Introverts in a World That Can’t Stop Talking, introverts get a bad rap in American culture. Ever since Dale Carnegie began writing manuals might l on glad-handing your way up the corporate ladder, US society has embraced the idea that extroversion is key to success: Your achievement—and even your level of creativity—depends upon your being gregarious and outgoing and able to work well in a team.

But as Cain’s work indicates, a new picture is emerging. Forcing everyone to act like extroverts harms the quality of our work and our lives. The good news that I’d add? Many digital tools are helping to mitigate that harm.

About half of Americans are introverts, Cain says. These are people who have a superb ability to focus but work best alone and become drained by too much enforced socializing. Yet the US workplace has evolved in complete opposition to their needs. Private office space has shrunk dramatically: 30 years ago, companies averaged more than 500 square feet per employee; today it’s less than 200. Meanwhile, corporations have pushed employees to work in face-to-face teams, marching them endlessly into conference rooms for brainstorms.

“There’s such a stigma against introversion,” Cain says. “To reveal that you’re an introvert puts you in a bad light.”

Yet this incessant teamwork isn’t useful. A mountain of studies has shown that face-to-face brainstorming and teamwork often lead to inferior decisionmaking. That’s because social dynamics lead groups astray; they coalesce around the loudest extrovert’s most confidently asserted idea, no matter how daft it might be.

What works better? “Virtual” collaboration—with team members cogitating on solutions alone, in private, before getting together to talk them over. As Cain discovered, researchers have found that groups working in this fashion generate better ideas and solve problems more adroitly. To really get the best out of people, have them work alone first, then network later.

Sounds like the way people collaborate on the Internet, doesn’t it?

Indeed it is—and as I’ve noticed, my introvert friends love it. Sure, the digital era has uncorked a fire hose of interaction, but it’s mostly asynchronous. With texting, chat, status updates, comment threads, and email, you hash over ideas and thoughts with a pause between each utterance, giving crucial time for reflection. Plus, you can do so in private.

“This is precisely what brings out the best in introverts,” Cain agrees. It’s why someone like Kawasaki thrives online. And it’s how the epic collaborations of the digital age—like Linux and Wikipedia—function: with a constellation of folks, many of whom probably peg the needle on the Introvert-O-Meter, working intimately but remotely.

Granted, not all online tools are good for introverts. As Cain says, research shows that Facebook’s endless friend-collecting is more appealing to extroverts than introverts.

But overall the irony here is pretty gorgeous. It suggests we’ve been thinking about the social web the wrong way. We generally assume that it has unleashed an unruly explosion of disclosure, a constant high school of blather. But what it has really done is made our culture more introverted—and productively so.

www.wired.com