Joahnna Soriano: Good afternoon, everyone. Thank you for joining us today, and welcome to Ayala Land's Full Year 2025 briefing. Let me begin by introducing our panel, Meean Dy, President and CEO; Jed Quimpo, CFO and Treasurer; Mike Jugo, Head of the Premium Residential Business Group; Mariana Zobel De Ayala, Group Head for Leasing and Hospitality. We are also joined today by members of our management committee, Robert Lao, Head of Strategic Growth, New Ventures and Central Land acquisition; Darwin Salipsip, Group Head of Construction Management; Raquel Cruz, Head of the Core Residential Business Group; and Isa Sagun, Chief Human Resource Officer. We likewise acknowledge your presence of our broader management team. Please note that the press release and presentation materials are available on our Investor Relations website. For any questions that we may not be able to address during the briefing, we will respond via e-mail at the soonest possible time. At this point, I'd like to turn it over to our CFO, Jed Quimpo for his presentation.
Jose Eduardo Quimpo: Thanks, Joe. Again, good afternoon to everyone, and thank you for joining us this afternoon for our full year 2025 analyst briefing. Allow me to present the key highlights of our 2025 financial and operating results, and then I will give the floor to our CEO. We are pleased to report that Ayala Land delivered total revenues of PHP 190.2 billion, up 5% versus prior year and net income of PHP 39.1 billion, up 39% versus prior year. Excluding gain from our sale of our 50% stake in Alabang Commercial Corporation and what we call as core revenues. Core revenues amounted to PHP 178.9 billion just 1% below prior year, and core net income reached PHP 30.6 billion, up 8% versus prior year. We invested in capital expenditures totaling PHP 92.9 billion, up 10% versus prior year with notable increase in our leasing and hospitality asset investments. Our balance sheet remains strong with net gearing ending at 0.78:1 within our guardrails on leverage. On portfolio segment revenues, despite market headwinds, Property Development revenues reached PHP 113.9 billion, plus 1% versus prior year following strong bookings of estate lots and offices for sale offsetting lower residential revenues. Leasing and Hospitality revenues reached PHP 48.7 billion, plus 7% driven by broad-based growth across all our segments, this despite ongoing renovations in key malls and hotels. Service revenues was down to PHP 11.8 billion, minus 34%, as a result of lower third-party contracts of our construction business and the absence of airline revenues, which we sold late 2024. Interest and other income was up PHP 15.8 billion primarily driven by gains from the sale of our stake in Alabang Commercial Corporation amounting to over PHP 11 billion. On our income statement, first, as mentioned, total revenues reached PHP 190.2 billion, plus 5% versus prior year. This is on the back of, number one, real estate revenues reaching PHP 174.5 billion, just slightly lower versus prior year as we saw stable property development revenues, improving leasing and hospitality revenues, but tempered by lower service revenues. Our interest and other income was up 275% primarily driven by the sale of Alabang Commercial Corporation. Total expenses reached PHP 134.1 billion, down 3%. We registered lower real estate expenses, PHP 104 billion, down 7% driven by the revenue mix where there was an increase in sales of estate lots an increase in share of leasing business in our overall mix and the absence of airline expenses. General and administrative expenses amounted to PHP 10 billion, up 9% and we registered a GAE ratio versus core revenues of 6%. Interest expense, financing and other charges amounted to PHP 20.1 billion, primarily driven by 2 factors. First, increase in total borrowings and increase in cost of debt; and number two, in 2024, we reversed provisions previously made for airline operations following its sale late 2024. Earnings before income tax came in at PHP 56.1 billion, registering EBIT margin of 40% and on a core EBIT margin basis 36%, 300 basis points better versus prior year. Provision for income tax was at PHP 10.5 billion with an effective tax rate similar to that of prior year. Noncontrolling interest increased by 7% to PHP 6.4 billion, mainly due to the higher net income of AREIT attributable to its own public shareholders. Consolidated net income climbed to PHP 39.1 billion, excluding the gain from the sale of Alabang Commercial Center core NIAT grew by 8% to PHP 30.6 billion, just shy of the 2x 2025 GDP growth. Turning to our detailed revenue breakdown. Property development was stable at PHP 113.9 billion despite market headwinds. Residential revenues hit PHP 91.4 billion, slightly lower by 4% versus prior year on strong core residential bookings, partially offsetting weakness in the premium residential bookings. Estate lots rose to PHP 17.7 billion, up 21% on strong bookings from Circuit Makati, Arca South in Taguig and Centralia in Pampanga. Office for sale increased to PHP 4.8 billion, up 40% on robust new bookings at One Vertis Plaza in Quezon City and the Genetic Corporate Plaza in Makati. On leasing and hospitality, broad-based growth across the entire portfolio, delivering revenues of PHP 48.7 billion. Despite ongoing reinventions in our flagship malls, shopping center revenues reached PHP 24.2 billion, 5% up versus prior year due to higher occupancy, lease rates and merchant sales. Offices reached PHP 12.2 billion, 5% higher on stable occupancy and higher average portfolio rental rates. On hospitality, it climbed to PHP 10.6 billion, up 9% on higher room rates and new capacity following our purchase of New World. Again, this despite renovations in key hotel assets for most of 2025. Industrials jumped to PHP 1.7 billion, up 37% versus prior year, on the contribution of industrial land, which we housed in AREIT and new cold storage facilities. Services was 34% lower year-on-year at PHP 11.8 billion. Construction stood at PHP 8.9 billion, 31% lower versus prior year, following our completion of third-party data center project in 2024. Property management and others dipped 42% to PHP 2.9 billion due to the absence of airline revenues. Property management by itself was stable, delivering PHP 1.9 billion. In terms of margins, most of our product gross margins and EBITDA margins are within our targets. For the Property Development business, Residential business registered 47% for horizontal products and 41% for our vertical products. Estate lots came in at 55%, primarily as a result of the product mix, and office for sale was steady at 48%. On our Leasing and Hospitality business, shopping centers delivered stable 64% EBITDA margin. Offices was likewise stable at 89%. Hospitality was at 22%, which we expect to improve with renovated room capacity now back online, which we brought back in 4Q 2025. Dry warehouses was stable at 78%. Cold storage was at 23%, which we similarly expect to trend up as we stabilize new capacity that we brought in. Services which is composed of construction and property management are at 5%, well within our expectations. Next, let me walk you through the operating performance highlights of our businesses, starting with Property Development. Total sales across our Property Development portfolio amounted to PHP 142.3 billion, basically flat versus prior year. Premium sales was slightly down at 3%, again, this despite market headwinds. Core was up 1% on our focused sales effort to move our inventory and stay ahead of the industry. Estate lots delivered PHP 17.1 billion in sales, up 16% as we saw robust interest in our various commercial, industrial and leisure lands. We launched a total of PHP 60.4 billion projects in 2025, notably 40% lower versus prior year, in line with our continued focus of capital efficiency. Deep diving on the residential products. Residential sales was sustained at PHP 125.2 billion, just 1% down versus prior year. By segment, our premium generated nearly PHP 80 billion in sales at PHP 78.6 billion. Our core market delivered positive year-on-year growth at PHP 46.6 billion. On an overall basis, our residential revenue as of end 2025 stood at 19 months, better than the 22 months as of end 2024. By product type, vertical sales was resilient at PHP 82.3 billion, up 2% year-on-year anchored by Laurean. Horizontal sales declined by 7% to PHP 42.9 billion as we saw buyers look at our estate lots as an alternative. We launched a total of PHP 46.6 billion in residential products last year, again, notably 42% lower versus prior year as we focus ourselves on selling existing inventory. Almost 3/4 of our buyers are local Filipinos and on a year-on-year basis was flat. Sales to overseas Filipinos stood at 17% which declined by 4% to PHP 20.7 billion, and sales to other nationalities was lower by 7% to PHP 12.8 billion, primarily attributable to sentiment headwinds or tighter terms and our shift to more premium segment products. Moving on to the op stats of our Leasing and Hospitality business. First, on shopping centers. We manage a total gross leasable area of 2.2 million square meters in 2025 and opened 29,000 square meters of gross leasable area during that year. With additional space in Ayala Malls Vermosa, and the opening of new malls in Evo City and Park Triangle. Lease-out was 1% higher year-on-year at 91%. We have a rolling pipeline of over 800,000 square meters of new mall space, 86% will be within our existing and our future estates. For 2026 alone, we will open over 200,000 in GLA, our largest annual incremental GLA to deal. This includes new malls at Arca South, Gatewalk in Cebu, an additional leasable area in Park Triangle, TriNoma, Nuvali, Evo City, and Greenville. On offices, our total GLA stood at 1.5 million square meters, and we opened 48,000 square meters with new assets in Nuvali and Atria in Iloilo. Portfolio average lease out is at 87%, 4% lower versus prior year, following completion of new facilities. Lease rate is up 2% despite continuing elevated supply in the market. Our 5-year expansion pipeline is over 300,000 square meters. Most of which will be concentrated in our key estate in Makati, BGC, Vertis North and Cebu. On hospitality, we ended the year with 4,658 rooms with net additional rooms of close to 400 primarily driven by the acquisition of New World last year. Hotel occupancy improved to 68%, plus 1% versus prior year, and resource occupancy was stable at 42%. Our updated pipeline involves the following, we look to open Mandarin Hotel this year, bringing in an additional 276 rooms, and in the next 5 years, build out and deliver over 1,500 additional keys. Finally, on our industrial real estate business, we ended the year with dry warehouse portfolio of over 380,000 square meters and cold storage pallet positions of 31,500. This boosted by acquisitions that we made in 2025. Our lease out on a dry warehouse is at 85%, following the addition of new capacity. On cold storage, it improved to 80% with new clients, sign-ups and robust demand from clients. We are looking to double our cold storage capacity in the next few years and have likewise secured sites for potential build-to-suit dry warehouses to expand our portfolio. For this year 2026, we are opening an additional 9,000 pallet positions of new cold storage capacity at Artico Consolacion in Cebu City. As mentioned, we invested a total of PHP 92.9 billion in CapEx, 10% higher versus prior year. Leasing and Hospitality was a major driver, doubling investment to PHP 27.1 billion and accounting for just under 30% of our total spend. Of this total spend for leasing and hospitality, 3/4 of which went to expansion CapEx, and 1/4 to reinvention initiatives. CapEx for residential was 38% of total primarily focusing on build-out of projects for delivery. Estates investments comprised 18% of total CapEx and the balance of 15% were for continuing land acquisition commitments. Our debt position continues to be well managed with 90% contracted into long tenures. Total gross debt as of end December 2025 stood at PHP 318 billion, up 13% versus prior year. We have kept our average maturity stable at 4.8 years. Our average borrowing cost was slightly up, ending at 5.5%. A bit over 70% of our debt is on a fixed basis and just other 30% is on a floating basis and of the floating component, almost 1/3 of that as an option to convert the fix. Our balance sheet remains strong, with net gearing ratio of 0.78:1. Cash and cash equivalents stood at PHP 19 billion. Our stockholders' equity grew by 7% to PHP 385 billion. Our current ratio is at 1.59:1, and our interest coverage ratio, just looking at core earnings is healthy at 4.9x. To summarize, Ayala Land delivered total revenues of PHP 190.2 billion and net income of PHP 39.1 billion, excluding gain from the sale of our 50% stake in Alabang Commercial Center, core revenues registered PHP 178.9 billion and core net income reached PHP 30.6 billion, up 8% versus prior year. Thank you.
Joahnna Soriano: Thank you, Jed. We'll pass it onto our CEO for her message.
Anna Maria Margarita Dy: Thank you, and good afternoon. Thank you for joining our full year 2025 analyst briefing. So I won't revisit the 2025 numbers in detail because Jed has already covered them thoroughly. Instead, let me step back and highlight what sits behind the results and how we're positioning the business for the next phase. Let's start with what 2025 demonstrated. Number one, capital efficiency is improving. We delivered roughly the same level of residential sales in 2025 as in 2024, but with 40% fewer launches. This tells us two things. First, our products are sustaining demand well beyond their initial launch cycles. And second, our sales organization is extracting more value from our existing inventory. A market like this, capital discipline matters, we are becoming more productive with every peso deployed. Number two, active portfolio management and shareholder returns. The sale of Alabang Town Center allowed us to recycle capital from a matured asset and fund higher return opportunities. This reflects the discipline we aim to consistently apply in managing and recycling capital. You've seen this, you've seen us take these steps when we sold AirSWIFT in 2024 and then repositioned by acquiring New World Hotel in 2025. At the same time, we continued to return significant capital to our stakeholders or to our shareholders, distributing 65% of prior year's income through dividends and share buybacks. We have concluded our share buyback program, and we'll be canceling the shares acquired under it supporting 10% EPS growth, all told, we delivered ROE of 12.5% in 2025. Even in a tight market, our ambition remains the same, to deliver earnings growth at the multiple of GDP growth. Number three, the leasing pivot is underway. We have been steadily repositioning to balance the portfolio with recurring income and that shift is becoming more visible in the numbers. Our leasing business delivered 7% year-on-year revenue growth. And excluding the reinvention related disruptions, growth would have been 11%. Renovated malls and hotels are being reopened. The New World acquisition has expanded our hospitality footprint. And going forward, leasing will account for a larger share of capital deployment. 38% of total full year CapEx from 29% in full year 2025. By 2027, we expect our EBITDA to roughly balance between leasing and development, strengthening our earnings profile and balancing profitability and growth. Number four, quality is a long-term differentiator. Quality is job #1 remains a work in progress, but we are seeing tangible proof points. Park Central Towers is now turning over and has been very well received by buyers and industry partners. Laurean Residences reflects our next generation of design thinking and deeper integration with our hospitality capabilities. The Heights Katipunan shows our focus on student residence with targeted amenities and enhanced security. Across our flagship malls, say the hotels and need the resorts, reinvestments are producing more contemporary, consumer-relevant and higher-yielding assets. These investments don't just translate into earnings overnight, but they strengthen pricing power, market position and secure long-term returns. Here are outlook and priorities for 2026. We are planning for another challenging year. The reality is that GDP growth is projected to stay below 5% and residential supply in Metro Manila remains elevated. But we are not waiting for this cycle to turn. We are leaning into the parts of the portfolio that grow more reliably while keeping our property development business stable and capital efficient. Number one, we will accelerate our leasing growth. The biggest driver of earnings growth in 2026 will be leasing. We will start with sweating existing assets, many of our renovated malls and hotels are now operational and the focus shifts to consumer delight and operational excellence. After completing the renovation of 5 key assets in 2025, our focus is now monetizing these upgrades, and we project a 10% to 20% room rate uplift from these newly renovated properties. The reinvention of our flagship malls will be completed by the end of June 2026. So by middle of this year with the reopening of Glorietta and Greenbelt and following the completion of Ayala Center Cebu and TriNoma in December 2025, we expect these renovations to generate a 15% to 20% uplift on rent. Alongside extracting value from recently completed assets, we will continue expanding the leasing platform. Leasing will account for a larger share of capital deployment as we scale malls, offices and hospitality within our states. In 2026, we will open over 200,000 square meters of new retail GLA, the largest single year addition in our history. We started with the opening of Arca South Mall last weekend and saw over 200,000 visitors in just the first weekend. We will open over 70,000 square meters of new office space in Evo City, Arca South and Gatewalk. In addition, we signed 3 new major leases with big multinational firms in Quezon City and Cebu totaling 82,000 square meters. The Mandarin Oriental will reopen in the fourth quarter, adding another 276 rooms to our hotel portfolio, but more importantly, this marks the return of 5-star hospitality to Makati after more than a decade. We are scaling our cold storage business thoughtfully, working towards doubling current capacity over the next few years. These represent meaningful steps in recurring income that will build over the next several years. Number two, keep residential stable, but more disciplined. On property development, despite market headwinds, our objective is to keep it stable as we lean in on the strength of our domestic and international sales team -- teams and by focusing on projects where we have high conviction on value proposition and sales momentum. This approach allows us to protect margins and ensure we maintain our market leadership. We have clear sight of PHP 30 billion of new launches firmly scheduled for 2026, and we have already launched pipeline that we can move on as we see market windows open. This gives us flexibility to scale quickly as the demand supply dynamics improve. We expect to deliver roughly the same level of residential sales as we did in 2025, and we will continue to be #1 in the residential space. Number three, continued disciplined capital returns. We are maintaining our 30% of prior year's net income dividend payout. We are also declaring a special dividend from part of the ATC or Alabang Town Center or Alabang Commercial Center proceeds, and we will continue to return excess capital to shareholders where appropriate. Four, protect the balance sheet and preserve flexibility. Historically, in periods like this, opportunities tend to surface, and we are beginning to see some of this emerge. Maintaining a strong balance sheet ensures we have the capacity to deploy capital quickly when these opportunities meet our return thresholds and strengthen our strategic position. For this reason, we will manage our existing businesses within their means and keep sufficient balance sheet headroom to act decisively when the right investments present themselves. So for 2026, we expect steady property development revenues and retaining our #1 position, a double-digit growth in leasing revenues with the biggest ever delivery of leasing GLA, continued margin improvement from operational excellence PHP 70 billion to PHP 80 billion in CapEx with a higher proportion going towards leasing and debt levels to be maintained well within our guardrails. Taken together, this positions us to generate earnings growth ahead of GDP and deliver higher return of capital via dividends to our shareholders. Thank you.
Joahnna Soriano: [Operator Instructions] Rafael go ahead.
Rafael Alfonso Javier: Rafe from BofA Securities. First of all, congrats on the good earnings result for the full year '25. My first question would be on the lot sales. I understand that I think there was a lot of catch-up that you did in the fourth quarter. I wanted to know how we -- how it's -- how it will look this year, I mean in terms of the quantum and the timing so that I mean, it will help us also with forecasting going forward. Yes. That's my first question.
Anna Maria Margarita Dy: So maybe let me answer that first question first. So we always say that lot sales are about 15% of our -- that's how we look at it. 15% of our total pickup for the year. And for 2026, that's still what we're looking at. Now in terms of timing, that frankly is a little bit harder to predict because these are deals and I'm sure you noticed that on the third quarter, it was actually quite weak. So these were deals that were still being worked on, and they would just happen to close on the fourth quarter. So there is a level of, I guess, lumpiness when it comes to these transactions. But at least when we're looking at the full year, it's still about 15% of the pickup is what we're looking at for our lot sales.
Rafael Alfonso Javier: Okay. And my next question is on land bank utilization. I understand it is also part of the mandate last year to really net utilize rather than acquire. How is the progress last year?
Jose Eduardo Quimpo: So our total utilization, Rafael last year is over 800. So the more precise number is 879.
Rafael Alfonso Javier: Okay. I think my last question is just a housekeeping one on the residential inventory level. How is it looking so far? Do you have a target to -- I mean, a target level that you want to achieve this year?
Joseph Carmichael Jugo: Yes. So thank you for the question, Rafe. So we've actually improved the inventory levels by a month. We ended the year about 19 months coming from 20 months and our aspiration for this year is to be somewhere in the 17- to 18-month range.
Joahnna Soriano: Jelline from JPMorgan also has a question. She's virtual attendee today. Sorry, there seems to be feedback. We have a question here from Niki Franco from Abacus Securities. He has a couple of questions. Number one, what's our outlook for borrowing costs this year?
Jose Eduardo Quimpo: Yes, I'll take that one. So as you know, there are projected or there has already been a reduction on policy rates. And when we talk to the analysts, the projection is there could also be another one. So taking this in mind, the way we model 2026 is that we are expecting or we're targeting to keep our borrowing cost at similar levels. So we ended the year at 5.5% We aim to keep it at 5.5% .
Joahnna Soriano: The second question is of the 1.5 million office leasing portfolio, what percent is leased to BPOs?
Mariana Zobel De Ayala: 70%.
Joahnna Soriano: Of the 200,000 retail GLA to be opened this year, how much of this new space versus reopen spaces?
Mariana Zobel De Ayala: That's entirely new space.
Joahnna Soriano: Okay. If there are no questions from the floor, we'll call in Jelline next -- sorry, Gilbert, go ahead.
Gilbert Lopez: More granularity or discuss your dividend policy. Moving forward, now that to end here buyback.
Anna Maria Margarita Dy: So I think even before the buyback, we were already doing about 30% of prior year's net income, which we intend to keep, so we're maintaining that. This year, in particular, we're doing a special dividend because of -- from the proceeds of the sale of Alabang Commercial Center. I think the 30% is probably what we are seeing something that's more stable for now. Going forward, it's really special dividends in the event that we have an asset monetization event.
Gilbert Lopez: So thank you, Meean. So for the special this year, how much does that bring your payout to inclusive of the special?
Jose Eduardo Quimpo: So it should drop here about 33% of prior year.
Gilbert Lopez: So it's around 10% -- so from 30% becomes 33%.
Anna Maria Margarita Dy: Of core net income.
Joahnna Soriano: Go ahead, Jelline. Yes, if you can just type in the question, we'll move on to Joan. Sorry, I think we're having some technical difficulties. So we'll just wait for the investors to type in the questions. Okay. So this one is from Daniela Picacho AB Capital. On residential launches, just to clarify, PHP 30 billion is your base case target for 2026. If so, what would be the triggers to push that higher? Is it purely dependent and you bring in your inventory life to sub 17 to 18 months? Or would you have to consider overall or system-wide inventory you see 4 years worth of inventory life? Also, can you remind us of the inventory life for your premium is.
Anna Maria Margarita Dy: We don't generally provide the breakdown, but let me answer the first question. So there are 2 figures. One is our inventory level, which may not necessarily be the only thing. The second is, what would be the competitive environment in that particular area. So I think the analysis would need to be more specific to the target market of the project. So for example, you're launching something in geography A, then we'll have to look at who else is playing in geography A? And what's the inventory going to be out there? .
Joahnna Soriano: On malls, you guided for roughly 15% to 20% rental uplift from reinvented projects. Could you quantify how much of this uplift should realistically flow into 2026 revenues versus later years? And what portion of this is already locked through signed leases?
Mariana Zobel De Ayala: So the 15% to 20% uplift should be seen immediately for 2026. The basket of merchant replacement program, Jelline, we talked about already took effect. Now Obviously, that also happens on a rolling basis because every year, we allocate a certain part of the GLA, which we refresh or reinvent.
Joahnna Soriano: Thank you, Mariana. We also have a question here from [indiscernible] can you provide an overall outlook on the demand scenario in the residential segment both at the premium and core and in Makati and other provinces as well? Yes, this is for residential.
Anna Maria Margarita Dy: I suppose for us, the demand outlook remains very positive. Our launches have actually been very well received, I think, Laurean, which we launched this year 37%.
Joahnna Soriano: 37% Heights Katipunan at 17%.
Anna Maria Margarita Dy: Yes, 17%. So if you ask us, actually, we believe that demand continues to be robust. Maybe where this question is coming from is why the relatively low level of launch for this year. So for us, it's not so much a demand issue. It's really more of a supply issue. And we'd like to make sure that, I guess, this industry-wide supplies first taken up before we push more supply out there. So I think that's really the concern. It's not that we are concerned about the demand. It's just we want the supply to be absorbed first before we launch full blast again.
Joahnna Soriano: He also has a question here on the current level of cancellations in the residential segment. We're now at 7.7% as of full year 2025, which is slightly better than 7.9% in the 9 months 2025. Any other questions from the floor? Still waiting for two to type Go ahead, Carl.
Carl Stanley Sy: This is Carl Sy of Regis Partners. I just have a few questions, mostly on the residential segment. So first, it looks like the reservation sales of the core segment fell in the fourth quarter, both on a year-on-year and quarter-on-quarter basis. From what I can tell, there were still promotions and discounts offered during that period. So while I understand there was, let's say, a flood control corruption scandal going on. Is that -- do you attribute the weakness mostly to that? Or is there some other -- something else? Also on the residential segment looking ahead, do you have some launch plans? Do you have a more positive outlook on core versus premium or Metro Manila versus provincial?
Joseph Carmichael Jugo: I think quarter 4, as we all know, a lot of negative sentiment. So I think that we didn't heavily -- whether it's a premium or our core market. But what we are looking at is really specific performances of certain projects. I think the Heights project, when you launched it, it's now at 17%. And Laurean had a very, very good take-up. We are ending as of today, PHP 10.4 billion or it's 37%. So the demand is there, based on certain projects and locations. As our CEO mentioned, certain geographies is really more challenging because of the supply situation now.
Anna Maria Margarita Dy: Maybe to add to that. So your second -- I'll try to answer. Second question is, are you more confident about certain segments. So horizontal, we remain very bullish, horizontal -- obviously, horizontal ex Metro Manila. In fact, most of our launches, except one will be horizontal this year, including some provincial horizontal launches outside Metro Manila. In terms of core, why did core decline in the fourth quarter, I think there's -- Katipunan got launched first quarter of this year. So I think there's a recovery in the first quarter.
Carl Stanley Sy: When you see a horizontal launches predominantly in 2026, would it be fair to say that's mostly premium?
Anna Maria Margarita Dy: No. Actually, we will be launching core horizontal as well this year.
Carl Stanley Sy: Got it. And then I'll ask a little bit about the office segment. I think if I heard correctly, you signed about 80,000 square meters of space already for this year. And with some context here, a lot of investors are concerned about the BPO sector, particularly in light of artificial intelligence. I want to check if the 80,000 square meters is predominantly BPO?
Mariana Zobel De Ayala: Yes, it is. I think we're still tracking -- I think IBPAP believes that from a revenue standpoint, BPO should grow 5% from a headcount standpoint, 2% to 3%. So we generally follow that guidance. That being said, our headquarter offices actually grew at a faster clip than BPO unsurprisingly.
Joahnna Soriano: I think Jelline's questions were similar to Carl, but we have a couple of other questions from Consilium. Can you please provide clarity on your -- okay, sorry, Sangam, we don't provide the breakdown for inventory. And then they're also asking about the strong pickup in the lot sales. Does this indicate that improving sentiment to premium level.
Anna Maria Margarita Dy: I think we achieved what we set out what we thought would achieve. I mean it's just that some of the sales we thought would have happened in the third quarter ended up happening on the fourth quarter. But I guess the same forecast last year as this year, about 15% of our sales, our total take-up will be coming from the lot sales.
Joahnna Soriano: Correct. We have a question here from RJ Aguirre of UBS. He wants to ask about the rationale behind selling ATC. This is arguably one of the group sought after Millstone location. And on market market, it's up for rebidding, this is going to be a priority for the group.
Jose Eduardo Quimpo: So yes. So let me take the question on Alabang Commercial Center. So just to frame it, if you look at the gross leasable area attributable to Alabang Town Center, that's actually less than 5% of our 2.2 million square meters. So I think from a portfolio management basis, it's not super impactful. If you use 5%, that's being a threshold of something that is impactful. Number two, if you run valuation, we are effectively sold at a cap rate of 3%, 3% cap rate. So as most of you know, when we transact something, for example, with AREIT, we turn out in the area of 6.5% to 6.8%. So having a buyer that's willing to pay a cap rate -- effective cap rate of 3% was a clear -- from a financial perspective, a clear value offer on the table. What allows -- what it allows us to do is actually be able to recycle a substantial amount of capital. So if you imagine if we can generate yields on our commercial leasing assets in the area of 10% to 12%, the money that you raise on a 3% cap rate and redeploy, you have sufficient capital to, number one, reinvest in very similar footprint and number two, have sufficient available balances to actually provide tangible returns on capital. So when I say returns of capital, it gives us an opportunity, for example, to give special dividends as what we're doing in 2026.
Anna Maria Margarita Dy: Yes, it's really a straightforward, I guess, capital recycling story. We're getting returns from a very mature asset. Meanwhile, we're opening 200,000 square meters of mall space today. We have 600,000 square meters of malls under construction and under planning. So this is simply reallocating capital from an asset that is already matured to one where we believe there will be more upside. The second question had to do with market market. So I think it's also been disclosed by BCA that we are in discussion for the extension of market market on the portion of the property that they are thinking of bidding out. I think we are also seeing in the news some government assets that they would like to privatize and to dispose. And as I said earlier, we do want to keep headroom in our balance sheet because times like this opportunities seem to surface.
Joahnna Soriano: We have a question from Niki of Abacus Securities. With major advances in artificial intelligence models announced in recent months, how concerned is management about the large exposure to BPOs, primarily in offices, but also the possible knock-on effects for residential?
Mariana Zobel De Ayala: Maybe I'll take for the offices portion. I think in the short term, we actually feel it might help -- the technology might help leapfrog some of the challenges on education and training side. I think generally speaking, medium to longer term, we're focused on opportunities around low vacancy areas and high-traffic areas. So that would be Makati, BGC, Candon City and Cebu. So I guess that's to say that we do imagine that AI will take effect on the sector.
Anna Maria Margarita Dy: I guess the second question was AI impact on...
Joahnna Soriano: Knock-on effects to residential, if any, in relation to...
Anna Maria Margarita Dy: I suppose it's -- the effect would be more macro in nature. If AI affects BPOs and BPOs affect the GDP or the economy and employment, then that's the more indirect but impactful negative effect on residential. But direct effect, I don't think we see anything.
Joahnna Soriano: These are the questions of Joy Wang from HSBC. What is your precommitment occupancy for the 200,000 new space to be introduced this year, is a 15% to 20% increase in rent just under rental rate for the new space.
Mariana Zobel De Ayala: Yes. So I think we've committed to keep our lease-up rate at 91%. So that will be, again, blended across the entire portfolio, taking into account that some of the newer malls will take a little more time to mature. In terms of the rental rate, so the 15% to 20% quoted was really on the merchant replacement program. So that's taking existing tenants and replacing them for higher-yielding tenants.
Joahnna Soriano: This one is for Jed. How should we think about the special dividend policy? Would this be a percent increase of the investment gain during the year or the previous year? I think this was already answered earlier by Jed. So the dividend policy, 30% of prior year's income. We're increasing that to 33%. So it's effectively a 10% increase from our existing dividend policy.
Jose Eduardo Quimpo: Yes. So we're tracking 33% of prior year's income. I'm sure you already saw the disclosure. So regular cash dividend stays at 30% of prior year's core net income, but we saw the opportunity to return capital. And so we're declaring an additional 10% of that by way of special dividends.
Joahnna Soriano: She also has a follow-up question. Management mentioned about capital return to shareholders while keeping sufficient capital for investment, what is the right balance sheet capacity that management wants to keep? How much more capital can we expect management to return to shareholders?
Jose Eduardo Quimpo: Yes. So on returns to capital, as I mentioned, we are tracking 30% plus an additional 3% regular and special dividends, that's for 2026. That's what we're planning on. In terms of leverage position, as mentioned, we are at 0.78x net debt to equity in terms of our balance sheet. From our perspective -- from management's perspective, we want to make sure that we don't reach one. So from our that room between 0.78:1 is actually the dry powder that we want to give. And the more we're able to expand that, the more it allows us to give room for key acquisition opportunities.
Joahnna Soriano: We have questions now from Jelline with JPMorgan. On capital deployment, launches and CapEx budgets appear lower on a year-on-year basis, while management does not intend to increase the buyback program. How do you plan to deploy freed up capital? What will entail to commit to a higher minimum dividend payout? I guess from a regular standpoint?
Jose Eduardo Quimpo: So I guess Jelline, the math, eventually, if you run all your models is that you'll probably see us taking on very little incremental debt for 2026. So from overall sources and uses of funds, the net change is really that you'll see Ayala Land aim to minimize incremental debt for 2026.
Joahnna Soriano: She also asked for the RFO mix in 4Q 2025, that's 8%. In terms of inventory to be completed this year, we're looking at about PHP 6 billion or 3.5% of inventory. Any more questions from the floor?
Unknown Analyst: I'm Paul from [indiscernible] first of all, congrats on your 4Q results. I have questions about the -- first about the mall performance. I'd like to ask for the occupancy rate of your newly opened malls like Park Triangle and Arca South. And what's the current tenant behavior regarding this -- on the newly opened malls?
Mariana Zobel De Ayala: So for Arca, we're actually almost 90% leased out for the first phase that we opened. And for Park Triangle, we're 65% leased out.
Unknown Analyst: Thanks Mariana. And another follow-up question is how much is Ayala Malls same mall sales growth for full year 2025 compared to 2024.
Mariana Zobel De Ayala: Yes. Same mall revenue growth was 7%, and the overall sales growth was 10% year-on-year.
Unknown Analyst: Excluding reinvention, how much is the...
Mariana Zobel De Ayala: One moment, let me get that for you.
Joahnna Soriano: Yes. Ex reinvention.
Mariana Zobel De Ayala: Yes. Okay. Ex-reinvention. Those figures that I gave.
Unknown Analyst: And another question about the RFO promos. Can you provide us a recap or a refresh on how the management is currently trying to reduce the current inventory there. That's what RFO promos are you offering? And how much discounts are usually available for buyers?
Joseph Carmichael Jugo: So generally, the RFO promos are stretch payment schemes or fairly sizable cash discounts. But I also want to highlight that our RFO situation now is much, much lower. It only represents 4% of total inventory. So it's quite low.
Joahnna Soriano: We have one final question from Daniela Picacho. Just a follow-up. Just a follow-up. You said resi cancellation rates have improved to about 7% to 8%. Could you share whether recent cancellations are concentrated in specific price segments, geographies or older vintages? I'm curious if newer bookings are showing better buyer quality.
Joseph Carmichael Jugo: So on the better buyer quality, what we've done and that has also admittedly impacted sales as we've tightened up on some of the down payment requirements. So even some of our launches, we do require down payments, especially for the core market. So that should help future cancellations or prospective cancellations. Most of the cancellations are actually in certain areas. So it's not spread out throughout the -- all of the projects within the premium core products.
Anna Maria Margarita Dy: Sorry just cancel it's a percent of revenue. It's very close to where we were already in 2019. I think we were 6%, if I'm not mistaken, we were about 6% in 2019 before the pandemic, about 6% of cancellation. 6% of revenues. Cancellations is equal to about 6% of revenue. So now we're at about 8%, which is a very big movement from where we started a few months -- a few years ago.
Joahnna Soriano: Correct, yes. Okay. Last question from the floor. Okay. If no more questions, that concludes our briefing on Ayala Land's for 2025. If you have any further questions, please feel free to reach out to the team. A recording of this briefing will also be made available on our website. Once again, thank you for joining us this afternoon.