LANCE Y. GOKONGWEI
Riding on the momentum of successful strategic initiatives, Robinsons Land Corporation (RLC) finished 2019 with another record performance. We strengthened our existing portfolio and consistently delivered on growth opportunities across our core business segments. The company also reached new heights with the addition of new, sustainable revenue streams from joint venture projects and industrial facilities, as well as our international investment. Through the collaborative work of the entire team, RLC was able to withstand external headwinds and take advantage of opportunities for long-term growth.
In 2019, consolidated revenues registered at Php30.58 billion, up by 3% mainly driven by the strong performance of recurring-income businesses under the investment portfolio. Our investment portfolio composed of the malls, offices, hotels, and industrial facilities contributed 69% of total revenues, with the 31% balance coming from the sale of residential units and land parcels that form part of our development portfolio. EBITDA also increased by 5% to Php17.25 billion, while EBIT grew by 3% to Php12.28 billion.
The year ended with a 6% rise in consolidated net income to Php8.69 billion from Php8.22 billion in 2018. This translated to a return on equity of 8.7% and to a cash dividend distribution of Php2.60 billion at Php0.50 per share. Apart from cash dividends, we likewise distributed to our shareholders RLC’s 100% stake in Altus Property Ventures, Inc. (APVI) as property dividend at a ratio of one (1) APVI share for every fifty-one and 9384/10000 (51.9384) RLC shares held, providing them the opportunity to own shares in both companies.
The Commercial Centers Division accounted for 43% of total company revenues. Mall revenues increased by 11% to end 2019 at Php13.25 billion versus Php11.94 billion in the previous year. Full-year rental contributions from four new malls strategically situated in the provincial cities of Ormoc, Iloilo, Tuguegarao, and Bukidnon fueled growth on top of same-mall rental revenue growth of 7%, and an uptick in cinema revenues. These resulted to a significant increase in EBITDA of 15% to Php8.82 billion, pushing EBIT up by 22% to Php5.17 billion.
This year, RLC opened Robinsons Galleria South, its third lifestyle center under the premium Galleria brand. It is the first world-class full-service mall in San Pedro, Laguna featuring modern interiors and beautiful artwork designs. With this latest addition to its growing mall portfolio, RLC now has a total of 52 malls, 9 of which are within Metro Manila, while 43 are situated in growing urban areas nationwide. RLC also opened the new expansion wing in Robinsons Magnolia, its upscale mall in Quezon City, featuring a refreshed open-air plaza, additional lifestyle stores and dining options, new cinemas, a family amusement center, and a chapel. This brought total gross floor area to approximately 3 million square meters (sqm) and total mall leasable space to 1.57 million sqm with over 9,000 retailers for a system-wide occupancy rate of 94%.
It was another banner year for our Office Buildings Division as it posted the highest revenue growth among all our businesses and contributed 17% to consolidated revenues. The success of our leasing activities for new developments, namely Cyber Sigma, Cyberscape Gamma, Exxa Tower, and Zeta Tower, and rental escalations in existing office buildings contributed to a 24% hike in revenues to Php5.32 billion from Php4.29 billion in 2018. EBITDA and EBIT likewise exhibited significant growth of 21% each to Php4.56 billion and Php3.73 billion, respectively. With the completion of Cybergate Magnolia within our Magnolia Complex in Quezon City, Giga Tower within Bridgetowne, and our second build-to-suit office development in Luisita, Tarlac, the Office Buildings Division capped 2019 with 23 operational sites in strategic locations for a total net leasable area of 592,000 sqm, a 13% increase from its 2018 record of 523,000 sqm.
Leveraging on the potential of the local hospitality industry, the Hotels and Resorts Division continued its expansion strategy to build one of the best and biggest multi-branded hotel portfolios in the Philippines. We opened Summit Hotel Greenhills in San Juan City, the sixth hotel under the company-owned Summit brand; and launched Dusit Thani Mactan Cebu, our first foray into the luxury resort niche. These new developments increased total hotel room count by 14% to 3,129 operational rooms. Contributing 8% of total company revenues, hotel revenues soared by 23% to Php2.43 billion from Php1.98 billion the previous year through higher occupancy rates of company-owned brands, Go Hotels and Summit Hotels, and buoyed by increased average room rates for international hotel brands. In addition, we turned around the decline in last year’s EBITDA performance with a 4% increase year-on-year to end 2019 at Php702 million. Additional depreciation from new hotels caused a 19% drag in EBIT which ended at Php343 million from Php425 million in the previous year. Our Hotels and Resorts Division concluded 2019 with 20 company-owned hotel properties and 5 franchisees, and a system-wide occupancy rate of 63%.
Formalized in 2016, the Industrial and Integrated Developments Division continues to be a reliable, steady source of new revenue streams. Operational industrial facilities registered lease revenues of Php138 million this year. As of December 2019, total industrial buildings leasable space has reached 77,000 sqm with locations in Sucat, Muntinlupa and Calamba, Laguna. On the other hand, developmental revenues from the partial recognition of gains from the sale of prime lots to Robinsons-DMC, Inc. (RDMCI) and Shang Robinsons Properties, Inc. (SRPI) reached Php321 million in 2019. RDMCI is a joint venture company formed by RLC and DMCI Project Developers, Inc. in 2019 to embark on the development of a multi-tower residential condominium project in Las Piñas City; while SRPI was incorporated with Shang Properties, Inc. in 2018 for the development of Aurelia Residences, an iconic, luxury residential condominium in Bonifacio Global City, Taguig.
Driven by successful project launches and fueled by strong demand from local and foreign buyers, our Residential Division posted another record-breaking net pre-sales of Php20.06 billion, a remarkable 31% increase year-on-year, mainly attributable to the launch of four new residential projects - The Sapphire Bloc East Tower, Galleria Residences Cebu Tower 3, Cirrus and the S Tower in SYNC, as well as sales of existing inventory. The combined sales value of these launches is estimated at Php15.25 billion. Realized revenues climbed by 5% to end at Php9.13 billion versus Php8.66 billion last year to account for 30% of consolidated revenues. On the other hand, EBITDA and EBIT surged by 32% to Php2.97 billion and 33% to Php2.88 billion, respectively, mainly on the back of sales of residential units from high-margin projects.
This year also marks the successful sell out and completion of residential condominium units in Phase 1 of our Chengdu Ban Bian Jie project in China. We hope to recognize related revenues upon completion of the final turnover milestone in the second half of 2020 in accordance with the applicable accounting standards in China. The Company will continue to realize earnings from its investments in China in the years to come.
In 2019, RLC spent Php25.40 billion in capital expenditure for its Philippine operations for the development of malls, offices, hotels, and industrial facilities, the acquisition of land, construction of its residential projects, and for new investments.
RLC maintained its healthy financial position with total assets of Php189.65 billion as of December 2019 versus last year’s Php174.16 billion. Total shareholders’ equity attributable to equity holders landed at Php99.51 billion from Php93.51 billion resulting to a 6% improvement in net book value per share from Php18.00 to Php19.16. Net financial debt-to-equity ratio closed at 0.36:1.
The company’s first destination estate development, Bridgetowne, was officially inaugurated last September 2019. The highlight of this sprawling development is a bridge that runs across the Marikina River and connects two major cities: Quezon City and Pasig City. Situated at the heart of the East of Metro Manila, Bridgetowne is a 30-hectare destination estate envisioned to be a sustainable mixed-use, self-contained community. It will be a place where everything is within reach, complete with residential condominiums, lifestyle malls, hotels, a one-hectare park, a school, a hospital and a dedicated transport terminal. Through Bridgetowne, we will enable Filipinos to embrace the live-work-play-dream lifestyle in a single locale.
In the same month, Aurelia Residences was launched with a limited collection of 285 bespoke residences characterized by the Italian concept of “sprezzatura”, an effortless and understated kind of elegance. The three-tower joint venture development is situated along McKinley Parkway in Bonifacio Global City, the fastest-growing central business district in the Philippines, making it one of the most coveted addresses in the country. It will feature expansive open spaces, skyline views, resort-style amenities, and convenient access to key locations in the metro.
FREDERICK D. GO
President & CEO
Robinsons Land entered the new decade with a prestigious recognition from Bloomberg as one of only two Filipino companies to land a spot in the 2020 Bloomberg Gender Equality Index (GEI). This is the first time that Filipino companies were recognized in the reference index that began in 2016. The distinction comes as a validation to the company’s continued efforts to create a sustainable workplace that champions a culture of inclusivity and provides equal opportunities for women in corporate roles. Notably, half of RLC’s current leadership positions are occupied by women and in totality, the company employs a female-dominated workforce at a ratio of 11:7. This is a testament to our commitment to bridge the gender gap through best-in-class policies and benefits.
Alongside this feat, Robinsons Land continues to build people’s dreams through quality developments that shape the landscape of the local real estate industry. We remain steadfast in our commitment to propel the company forward and to deliver unparalleled value to our stakeholders. Guided by our common vision to achieve sustainable, broad-based growth, we are optimistic that the company will achieve more milestones and cement its market leadership in the years to come.
The Commercial Centers Division aims to bring prime commercial developments closer to consumers by expanding into the provinces, further strengthening its position as the premiere mall brand with the widest geographical reach. In 2020, we plan to increase our mall gross leasable area by 3% to 1.62 million sqm with the opening of a mall in La Union and the expansion of Robinsons Place Antipolo and Robinsons Place Dumaguete. In the following year, we plan to expand our footprint in Metro Manila by opening a premium mall within Bridgetowne, and three new provincial malls in Nueva Ecija, Bataan and Batangas. These four new developments will add 9% to our total leasable space, boosting our mall portfolio to 1.77 million sqm by the end of 2021.
The office sector continues to follow the upward trajectory of the country’s economic growth. On the back of this positive outlook, our Office Buildings Division aims to solidify its position as one of the major IT-BPM office space providers in the country. We have a robust pipeline in 2020 comprising of five new office developments, namely Delta Tower 2 in Davao, Luisita 3 in Tarlac, Bridgetowne East Campus, Cyber Omega in the Central Business District of Ortigas in Pasig and Sierra Campus within our Sierra Valley estate. These new offices will increase net leasable area by 16% to approximately 686,000 sqm by the end of 2020. In the following year, we target to complete the development of Cybergate Iloilo 1, Cybergate Galleria Cebu, Cybergate Bacolod 2, and GBF Center 1. These new office projects will grow net leasable space by 14% to 784,000 sqm.
With a booming tourism industry which saw a 14% surge in tourist arrivals in 2019 as a backdrop, our Hotels and Resorts Division will continue to develop its growing portfolio to be the biggest hotel group in the country. Through well-diversified brands spanning multiple market segments, we will capitalize on the influx of foreign travelers into the country, and strong domestic tourism in Metro Manila and in leisure destinations. We plan to increase total hotel room count by 10% to 3,452 operational rooms with the opening of Summit Hotels Naga, Go Hotels Naga, and Go Hotels Tuguegarao in the next twelve months. In 2021, we intend to add 15% more keys through Westin Sonata, Summit GenSan, and Go Hotels San Nicolas to end with 3,957 operational rooms. Following a massive organizational build-up, the Division has likewise put into place major plans to build its own 5-star hotel brand in the country. In addition to our expansion strategies, we look forward to showcasing the result of our refresh and renovation works for Go Hotels, Crowne Plaza and Holiday Inn. Our guests will soon enjoy the contemporary interior and ambience of our chain of budget hotels, as well as the redesigned and refurbished guest rooms, grand ballrooms, and amenities of our two international-branded hotels.
For our Residential Division, we plan to launch about Php20 billion worth of new projects to take advantage of the foreseen strong demand in the Philippine residential property sector from domestic end-buyers and foreign investors. This bullish outlook is mainly driven by solid OFW remittances, attractive lending rates and the availability of mortgage financing from banks.
The Industrial and Integrated Developments Division will more than triple its total gross leasable space to 100,000 sqm from the launch of its first industrial project in 2018 with the completion of two additional industrial facilities in Muntinlupa and Calamba in 2020. By 2021, we plan to tap new territories and develop industrial properties within the province of Pampanga, which will boost our portfolio by 64% to 166,000 sqm. On top of this, we will continue to engage in the strategic acquisition of vast tracts of land that are optimally located within the government’s infrastructure projects to add to our growing number of destination estates. Currently, we are working on three destination estates, namely the 30-hectare Bridgetowne located within Metro Manila, the 18-hectare Sierra Valley in Rizal, and Montclair, a 200-hectare development in Pampanga. The Division will likewise continue to focus on the exploration of innovative real estate formats, new business ventures, and strategic partnerships in our mixed-use developments to further strengthen our earnings.
For 2020, RLC has earmarked approximately Php27 billion for capital expenditures to be funded through internally-generated cash from operations and borrowings. We believe this will continue to be the norm as RLC explores possible land acquisitions for new projects and boosts its landbank. Our existing land bank in the Philippines now totals to 786 hectares and we continue to be on the lookout for opportunities nationwide.
RLC will continue to build and sell the remainder of its Chengdu Ban Bian Jie project. We look forward to securing government approvals to proceed with the aforementioned activities at the soonest possible time. The earnings we hope to realize from our international investment shall trickle down to our bottom line in the next two to three years.
On the Human Resources front, your Company has added several key executives and management-level team members into its talent pool. Together, we are taking the Company on a growth path of sustainable profitability. With our grand plans of making every stakeholder proud to be part of RLC, we have launched or are implementing several major initiatives that are aligned with our purpose, vision, strategies, and goals.
Through important milestones, critical successes, and continuous growth, we would like to express our deepest gratitude to our Board for their support and guidance as we continue to navigate our path towards a sustainable future. We are also grateful to our shareholders, business partners, patrons and customers for their continuous support in the attainment of our corporate goals. We also thank our employees for their passion, dedication, and invaluable contribution in making the company what it is.
As we look ahead, we are continually inspired by the legacy of our founder and Chairman Emeritus, Mr. John L. Gokongwei, Jr. Mr. John built Robinsons Land Corporation to be a catalyst for nation-building through property developments that provide Filipino families access to a better quality of life. His vision, values, and principles will always serve as our guiding light in the continuous quest to transform dreams into reality.
Maraming salamat po.