A significant shift is underway for one of the nation’s leading real estate developers. First-quarter net income experienced a notable decrease, dropping over 21% to P5.4 billion, signaling a recalibration in strategy amidst evolving market dynamics.
Overall revenues also felt the impact, declining nearly 14% to P37.5 billion. This downturn was primarily driven by a softening in the property development sector, reflecting a more cautious approach from potential homebuyers.
The residential market specifically saw revenues fall from P27.8 billion to P20.3 billion. This decrease points to a period of reduced demand and a more discerning attitude among those considering property investments.
However, the story isn’t solely one of decline. Leasing and hospitality operations provided a crucial counterbalance, experiencing a collective 9% revenue increase to P12.6 billion. This growth was fueled by improved occupancy rates, robust tenant sales, and the positive contribution of new and revitalized properties.
Mall revenues demonstrated strength, reaching P5.8 billion thanks to increased foot traffic and the successful launch of Ayala Malls Arca South, adding a substantial 17,500 square meters of leasable space.
The hospitality sector experienced an even more dramatic upswing, with revenues surging 30% to P3.4 billion. This impressive growth was supported by expanded capacity at the New World Makati Hotel and the positive impact of renovations at Seda and Holiday Inn properties, alongside strong performance at the Lagen Resort in El Nido.
Office leasing remained stable, generating P3 billion in revenue with occupancy levels consistently exceeding industry averages, demonstrating continued demand for prime office spaces.
The industrial estate segment also contributed positively, posting revenues of P439 million – a 23% increase driven by greater utilization of warehouse and cold storage facilities, highlighting the growing importance of logistics and supply chain infrastructure.
Despite the overall revenue decline, sales reservations remained healthy at P28.2 billion for the quarter, averaging P9.4 billion monthly. Residential sales held steady at P24.4 billion, with demand concentrated in premium properties, core offerings, and estate lot segments.
In response to the changing landscape, the company is adjusting its capital expenditure plans for 2026, scaling back from an initial projection of P70-80 billion to approximately P50 billion. This strategic move reflects a commitment to a more measured and selective approach to project launches.
The focus is now firmly on prioritizing existing projects and carefully managing the development pipeline. Leadership emphasized the need for a “more deliberate approach to how we deploy capital,” actively reshaping the portfolio to strengthen recurring income streams.
This year, the company intends to deliver approximately 13,000 residential units across 40 projects, prioritizing the completion of existing inventory and fulfilling commitments to current buyers.
The overarching strategy for 2026 centers on expanding the leasing and hospitality platform, stabilizing property development, and maintaining a strong balance sheet. This represents a deliberate effort to build a more resilient and diversified business model.
Financial indicators suggest a stable position, with a net gearing ratio of 0.81:1 and an interest coverage ratio of 4.6 times, demonstrating healthy leverage and the capacity to manage debt obligations.
Future growth will be fueled by expanding the recurring income base, with plans to add over 270,000 square meters of mall and office space and the highly anticipated reopening of the Mandarin Hotel, further diversifying revenue streams.
Capital expenditures for the first quarter reached P23 billion, an 11% increase year-over-year, with a significant 53% rise in spending on leasing assets due to ongoing expansion and redevelopment initiatives.
The market reacted to the news, with shares experiencing a decline of over 4% on Thursday, closing at P15.10 each, reflecting investor assessment of the revised outlook and strategic adjustments.
