Never waste good crisis: ALI beefs up war chest
Property giant Ayala Land Inc. (ALI) is tightening its balance sheet and building up financial firepower as it prepares to seize acquisition opportunities in a more challenging environment.
In an exclusive interview with the Inquirer, chief financial officer and treasurer Jose Emmanuel Quimpo said the Zobel-led property developer was deliberately preserving “dry powder” by keeping leverage at prudent levels and cutting capital expenditures to strengthen cash reserves.
“If opportunities arise, we want to be there,” he said.
For every P1 of equity that the shareholders put into the business, ALI has borrowed only 80 centavos. Generally, such a ratio below 1:1 is considered conservative, as this means the company owns much more than it owes.
At the same time, ALI’s profits are 4.6 times larger than its interest payments.
Quimpo said these metrics allow the company to maintain flexibility while still funding expansion.
“If we stay within those guardrails, we keep a certain level of dry powder,” he said. “So that if there’s something we need to buy, we will buy it.”
Quimpo said the strategy was partly driven by expectations that some heavily indebted firms may eventually seek to deleverage amid rising inflation and interest rates alongside slowing economic growth.
“Never waste a good crisis,” he said, citing the company’s long-held strategy of taking advantage of market dislocations during difficult periods.
In the aftermath of the Asian financial crisis, for instance, ALI picked up in 2002 the sprawling former military-owned estate that has now been developed into BGC central business district.
Current strategy
To preserve liquidity, ALI reduced its capital expenditure budget to around P50 billion this year from an earlier P70 billion to P80 billion plan. The company is also targeting close to zero incremental debt.
Quimpo said the company was taking a more defensive stance as property developers face softer sentiment due to inflationary pressures and higher borrowing costs.
Still, ALI said its core operations remain intact, with about 13,000 units across 40 projects scheduled for delivery this year.
Expansion of its leasing portfolio—including malls, offices and hotels—also remains on track, with around 200,000 square meters of new mall space set for completion.
The company has likewise taken selective steps to manage execution risks, including canceling a Katipunan condominium project and pausing the Laurean Residences in Makati.
Quimpo said both projects were still in the early stages and had yet to begin construction, allowing the company to reassess costs, pricing and market conditions before committing further capital.
