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It was a banner year for Robinsons Land Corporation with 2018 being marked by robust financial and operational performance. We continued to strengthen and expand our core businesses while building new teams focused on capitalizing on innovations and emerging business opportunities. The collective experience and expertise of management have enabled the company to create broad-based, sustainable growth amidst an ever-evolving real estate landscape.
The year marks an important milestone for the Philippine economy as well. The first package of the comprehensive tax reform program otherwise known as the “Tax Reform for Acceleration and Inclusion (TRAIN)” was put in motion. The TRAIN law augmented the spending power of Filipino consumers which fueled demand. However, the uptick in demand came with inflationary pressures from rising commodity prices, a weaker peso and interest rate hikes. Despite these headwinds, Gross Domestic Product still accelerated by 6.3%, with consumption at the forefront accounting for about 70%. The country’s consumer-driven economy supported by sound macroeconomic fundamentals and a responsive monetary policy framework has paved the way for a vibrant property sector.
RLC ended the year on a bright note with a 40% surge in net income to P8.22 billion, with revenues growing by 31% to P29.55 billion. The investment portfolio consisting of the malls, offices, hotels and warehouse facilities accounted for 62% of total revenues, while the balance of 38% was generated by the development portfolio comprised of revenues from the sale of residential units of our four residential brands as well as two parcels of land. EBITDA rose by 31% to P16.34 billion while EBIT accelerated by 39% to P11.88 billion.
The Commercial Centers Division contributed 40% of total revenues and posted an 11% increase in revenues to P11.94 billion from P10.79 billion in the previous year. The increase was mainly brought about by the expansion of mall space by 8% to 1.50 million sqm as a result of the opening of four new provincial malls located in the cities of Ormoc, Iloilo, Tuguegarao and Valencia, as well as the full-year impact of the new malls opened during the second half of 2017. Robinsons Galleria in the Ortigas Central Business District (CBD) likewise lifted rental revenue growth as tenants’ occupancy and sales started to pick up since its redevelopment. Cinema revenues also gained ground with the opening of new branches. EBITDA rose by 9% to P7.67 billion while EBIT grew by 6.0% to P4.24 billion. Our total mall portfolio ended with 51 shopping malls, 9 of which are located within Metro Manila and 42 are located in other urban areas nationwide.
Our Office Buildings Division continued to expand its share of total revenues, now at 15%. Office revenues registered double-digit growth of 31% to P4.29 billion from P3.27 billion last year. EBITDA and EBIT likewise exhibited significant growth of 28% to P3.76 billion and 33% at P3.07 billion, respectively.
The increase was buoyed by rental escalations in existing office developments, full-year contribution of offices completed in 2017 and some contribution of new offices that came online in 2018 namely Exxa Tower, Zeta Tower and Cyberscape Gamma. The addition of these three new offices expanded total leasable space by 29% to 523,000 sqm from the previous year’s 405,000 sqm. We have also opened our own flexible workspace business, “work.able”, in response to the demand for flexible office options such as private offices, venues for meetings and events, and co-working spaces. With 20 completed office developments in our portfolio, including a new product offering, our Company continues to be a leading provider of office space in the Philippines.
It was a transformational year for our Hotels and Resorts Division as we continued to lay the foundation for one of the best and biggest hotel portfolios in the Philippines. We opened Summit Hotel Tacloban and our 18th hotel, Go Hotels Iligan, each the largest hotel in its city. These new hotels added 9% to the hotel room count to 2,736 rooms. In addition to the full-year impact of Summit Galleria Cebu which we opened in 2017, these two new hotels resulted in a 5% increase in hotel revenues to P1.98 billion as against the previous year’s P1.89 billion. In anticipation of our expansion, we have beefed up the organization with a stronger management team. EBITDA and EBIT took a hit, declining by 7% to P674 million and 22% to P425 million, respectively, on the account of anticipated higher overhead expenses in the Head Office and pre-operating expenses incurred for new and upcoming hotels.
Just one year from its formation, the Industrial and Integrated Developments Division (IID) made its mark as a legitimate source of new revenue streams with a 9% contribution to total revenues. The completion and turnover of our first warehouse facility located in Muntinlupa grew lease revenues to P135 million versus P14 million last year. On the other hand, developmental revenues propelled to P2.51 billion arising from partial recognition of revenues from the sale of prime lots to RHK Land Corporation (RHKLC) and Shang Robinsons Properties, Inc. (SRPI). RHKLC and SRPI are joint venture companies we have jointly formed and control with our strategic partners, Hongkong Land Group and Shang Properties, Inc., to embark on the development of various residential projects. Aside from diversifying the company’s sources of revenues, the collaboration aims to combine our experience and local knowledge with the international appeal and distinct expertise of our strategic partners while leveraging on each other’s financial capabilities.
Riding on the momentum of strong sales take up in 2017, and the introduction of more targeted product offerings, our Residential Division reported a 33% growth in realized revenues to P8.69 billion versus P6.55 billion last year, accounting for 29% of total revenues. EBITDA and EBIT were up by 21% each to P2.21 billion and P2.13 billion, respectively. Net reservation sales posted a fresh record of P15.32 billion, a 49% jump from P10.26 billion the previous year, mainly driven by the launch of five new residential projects with a total estimated sales value of P12.28 billion namely: The Radiance Manila Bay South and The Magnolia Residences Tower D under the Robinsons Residences brand; Aurora Escalades and Gateway Regency Studios under the Robinsons Communities brand; and Springdale Angono Phase 1 under the Robinsons Homes brand.
The company’s financial position remained healthy with total assets at P174.16 billion from P148.13 billion in 2017, and total shareholders’ equity attributable to equity holders of the company at P93.51 billion from P67.09 billion the previous year. Net book value per share improved to P18.00 per share in 2018 from P16.39 per share in 2017, while net financial debt to equity ratio ended at 0.37:1. Return on equity stood at approximately 9%.
OUTLOOK FOR 2019For 2019, we see our businesses reaching new heights. Apart from the organic growth of our traditional four core businesses, we will benefit from several new revenue streams: first, the realization of earnings from our Chengdu Ban Bian Jie project; second, the launch of new projects under our joint venture companies; third, industrial and warehouse leasing; fourth, land sales in township developments; and fifth, experimental projects like work.able. Given these, we are optimistic of sustaining our growth momentum in the coming years.
For the Commercial Centers Division, we have four new malls and three expansion malls in the planning and development stages, for completion in the next two years. In 2019, we plan to increase our mall footprint by 5% to 1.58 million sqm with the opening of Robinsons Galleria South in San Pedro, Laguna and the expansion of Robinsons Magnolia in Quezon City. The following year, we plan to open new malls namely Robinsons Place La Union, Robinsons Place Gapan and Robinsons Place Balanga and expand our existing malls in Antipolo and Pampanga. These will add 6% to mall space to end at 1.68 million sqm by the end of 2020.
Our Office Buildings Division continues to benefit from the booming Business Process Outsourcing industry as expansion in 2019 will include the completion of Giga Tower in Bridgetowne West, Cybergate Magnolia, and Cybergate Delta Two in Davao City. These will boost net leasable space in 2019 by 14% to 596,000 sqm. In 2020, we plan to complete Cyberscape Omega in Pasig City and offices within the Galleria Cebu and Starmills complexes which will bring net leasable office area to 669,000 sqm, a 12% increase.
By the end of 2019, our Hotels and Resorts Division will have a total of 23 hotel properties with the addition of Dusit Thani Mactan Cebu Resort, Summit Hotel Naga, Summit Hotel Greenhills, Go Hotels Naga and Go Hotels Tuguegaro. These new hotel properties will result to a 23% rise in the number of rooms owned to 3,371 rooms. For following year, we plan to add 12% more room keys to end at 3,770 rooms with the opening of Summit Hotels General Santos and our fourth international-branded hotel, Westin Hotel in Ortigas Center. Moreover, our Go Hotels brand has 5 franchised hotels with 963 rooms.
Demand for residential property remains robust, further augmented by the strong interest of buyers from China. To capitalize on this momentum, our Residential Division plans to launch at least P12 billion worth of new projects under the Robinsons Residences, Robinsons Communities and Robinsons Homes brands. The upcoming identified projects are The Sapphire Bloc East, Woodsville Crest 1 & 2, Sierra Valley Gardens Tower 1 and Cirrus.
For our Industrial and Integrated Developments (IID) Division, we will be completing our second warehouse facility in Calamba, Laguna in 2019 which will double the gross leasable area to 68,000 sqm. The following year, we shall add two more warehouse facilities in Muntinlupa and Laguna which will add another 37% of leasable space to 93,000 sqm. The IID Division will continue to focus on several projects related to strategic land bank acquisition and management, exploration of real estate-related infrastructure projects, new business ventures and lot sales in our mixed-use developments.
Both our joint venture companies, SRPI and RHKLC, plan to launch high-end residential projects located in Bonifacio Global City and in Bridgetowne East, respectively, in the second half of 2019. We shall recognize further gains from the sale of land to the aforementioned joint venture companies upon sale of the residential units and subject to project completion.
We have appropriated from our retained earnings approximately P27.0 billion for domestic capital expenditures which will be funded through internally generated cash from operations and borrowings.
Our land bank in the Philippines now totals to 757 hectares with a total market value of about P45.5 billion. Metro Manila accounted for 47% of estimated market value owing to the higher property prices in the central business districts and their peripheries.
For our Chengdu Ban Bian Jie project, we have successfully sold approximately 95% of the condominium units for Phase 1 at the end of the fiscal year. It is expected that the Company will recognize revenues and related costs in 2019. We intend to accelerate the completion of the project and have already commenced with the development of Phase 2. The quick execution of the Chengdu project is a testimony to the abilities of the Company in an international territory.
It is worthwhile to mention that the Company has created a Digital Transformation Department to spearhead multiple programs to use digital technology to increase efficiencies, improve internal and external communication, and enhance customer experiences, among others.
ACKNOWLEDGEMENTWe would like express our gratitude to our Board for their confidence and guidance as we continue to navigate our path toward a sustainable future. We are also grateful to our shareholders, business partners, patrons and customers for their continuous support. Lastly, we would like to thank our employees for their hard work, dedication and teamwork as we continue to build people’s dreams.
Maraming salamat po.
