Lance Y. Gokongwei
Chairman
Frederick D. Go
President & CEO
On the back of a strong start in 2020, Robinsons Land Corporation (RLC) was poised for a record year. Like many companies, however, the business was confronted with unprecedented challenges in the face of compounding crises. The onslaught of natural calamities and the COVID- 19 pandemic disrupted supply chains, business operations, and workplace structures, forcing a shift in priorities and short-term strategies.
Nevertheless, RLC and its dedicated employees continued to serve its customers, business partners, and stakeholders. At the height of community quarantines, our malls and offices remained open to support establishments offering essential services, such as groceries, pharmacies, banks, and IT-Business Process Management (IT-BPM) firms; while our residential teams worked relentlessly to ensure safety and security across our condominium properties. Likewise, our hotels served as temporary homes for returning Overseas Filipino Workers (OFWs) and guests under quarantine. The Company also institutionalized heightened cleanliness standards and invested in contactless technologies to minimize health and safety risks.
While the Company ensured business continuity, employee welfare and protection remained of utmost priority. Amid trying times, we provided salary continuance, financial support for frontliners, nutrition supplies, temporary accommodations, as well as free shuttle services. In addition, RLC adopted remote work arrangements and supported a digital workplace to safeguard the wellbeing of all operational stakeholders. For the same reason, the annual shareholders’ meeting was conducted in a virtual format for the first time.
“While the Company ensured business continuity, employee welfare and protection remained of utmost priority. Amid trying times, we provided salary continuance, financial support for frontliners, nutrition supplies, temporary accommodations, as well as free shuttle services. In addition, RLC adopted remote work arrangements and supported a digital workplace to safeguard the wellbeing of all operational stakeholders.”
In 2020, RLC demonstrated the resilience of its diversified portfolio as it generated positive cash flows across its business units. The Company ended the year with EBITDA of Php13.68 billion and Net Income of Php5.26 billion, which declined by 21% and 39%, respectively versus same period last year. Consolidated revenues registered at Php25.40 billion, down by 17%. The Company’s investment portfolio, composed of the malls, offices, hotels, and industrial facilities, contributed 51% of total revenues, with the 49% balance coming from the sale of residential units and land parcels that form part of our development portfolio.
RLC maintained a strong financial position with Total Assets at Php215.20 billion and Shareholders’ Equity at Php102.72 billion. Its liquidity position remained intact following a Php13.19-billion bond offering in July, which obtained the highest credit rating of “PRS Aaa with a stable outlook” and was well-received by the debt capital markets. With a net gearing ratio of only 39%, RLC possesses financial flexibility to navigate short-term headwinds caused by the pandemic. Furthermore, in line with our firm commitment to return value to our shareholders, we distributed Php2.60 billion or Php0.50/share in cash dividends in 2020.
The Commercial Centers Division accounted for 23% of company revenues to close at Php5.96 billion in 2020, 55% lower versus previous year, while EBITDA dropped 53% to Php4.11 billion. Rental concessions were provided to support the recovery of partner tenants affected by temporary mall closures and quarantine restrictions.
In response to public health and safety concerns, several innovative services were rolled out to facilitate worry-free shopping experiences. Robinsons Malls’ Pickup Station, RDelivery, and RPersonal Shopper offer safe and easy ways for customers to shop, while enabling partner tenants to expand consumer reach.
In the second half of 2020, mall revenues started to rebound on the back of sustained improvements in operational gross leasable area, number of operational tenants and foot traffic. These performance indicators are expected to gradually rise over time as quarantine restrictions continue to ease.
Robinsons Malls closed 2020 with a system-wide occupancy rate of 93% on a total gross floor area of approximately 2.93 million square meters (sqm) and total mall leasable space of 1.52 million sqm, which declined by 3% following the deconsolidation of Altus Property Ventures, Inc. (APVI) from RLC. APVI made its debut in the local stock market in June by virtue of listing by way of introduction.
Leveraging on its portfolio of high-quality assets, the Office Buildings Division finished the year strong and contributed 23% to consolidated revenues. The success of our leasing activities for new developments, namely Giga Tower, Cybergate Magnolia, Robinsons Luisita Office 2 and Cybergate Delta 2, and rental escalations in existing office buildings grew revenues by 10% to Php5.85 billion. EBITDA accelerated 11% to Php5.08 billion, while EBIT surged 12% to Php4.18 billion.
With the completion of Cybergate Delta 2 in Davao and our third build-to-suit office development in Luisita, Tarlac, the Office Buildings Division capped 2020 with 25 operational sites across more than 613,000 square meters of total net leasable space, a 4% increase from 2019. Meanwhile, we continue to strengthen our portfolio of flexible workspaces under the work.able brand, which now has five (5) operational sites in Pasig City, Quezon City and Taguig City with around 1,200 seats.
The Hotels and Resorts Division operated a maximum of 13 of its 20 hotel properties in the midst of a global pandemic that crippled the hospitality and tourism industries. The Company’s hardest-hit business unit managed to post revenues of Php1.08 billion and EBITDA of Php153 million in 2020, with occupancy rates in operational hotels ranging from 20% to 96%. The completion of remaining rooms in Dusit Thani Mactan Cebu increased total room keys to approximately 3,188.
To achieve operational viability in the ‘new normal’, RLC repurposed its accommodation facilities and offered relevant solutions to customer challenges brought about by quarantine measures. Summit Hotels and Resorts and Go Hotels launched Working-On-the-Go Private Offices to offer affordable private office packages for the growing work-at-home population. Go Hotels also rolled out long-stay services under the Just-Got-Home program, which primarily attracted urban professionals looking for a budget-friendly place that is in close proximity to their workplaces and other key establishments.
Our ability to adapt to the context in which we operate is a testament to the Company’s agility and strength in this time of uncertainty. With our strong, multi-branded hospitality portfolio, we expect to regain significant foothold in the market as travel restrictions ease and as consumer sentiment recovers.
The Industrial and Integrated Developments Division grew revenues from operational industrial facilities by 90% to Php262 million, driven primarily by its first warehouse facility in Calamba. EBITDA ended at Ph139 million, while EBIT closed at Php86 million. As of December 2020, total leasable space has reached 99,000 sqm, with locations in Sucat, Muntinlupa and Calamba, Laguna. On the other hand, developmental revenues from the partial recognition of gains on the sale of prime lots to Robinsons-DMC, Inc. (RDMCI) and Shang Robinsons Properties, Inc. (SRPI) reached Php133 million in 2020.
In 2020, we adopted a new accounting treatment on revenue recognition for our Residential Division. Realized revenues were booked at 10% equity versus the previous threshold of 15% equity to be consistent with the practice of most property companies in the Philippines. As a result, realized revenues rose 33% to Php12.13 billion, while EBITDA and EBIT surged 40% and 41% to Php4.16 billion and Php4.07 billion, respectively.
Net sales take-up began to show signs of recovery in the second half of the year. We expect to continue posting gradual improvements over time on the back of projected rebound in demand for residential units in cities or provinces near Metro Manila. Full-year net sales take-up, excluding those from Joint Venture Companies, closed at Php7.29 billion, 36% of 2019 levels. On the other hand, the combined Aurelia, Sonora, and Velaris projects recorded reservation sales of Php6.98 billion in 2020.
Earlier in the year, we launched three new residential projects worth Php10 billion – the Sapphire Bloc South in Ortigas Center and Sierra Valley Gardens Buildings 1 & 2 located in Cainta, Rizal. While the pandemic tempered real estate demand, the Company continued to improve customer experience with the rollout of three digital platforms, namely the Sellers Portal, Buyers Portal, and myRLC Homeowners Portal, which facilitated easy, convenient, and seamless transactions. Conceptualized and developed before the crisis struck, these innovative solutions prove that RLC’s digital transformation initiatives are future-ready.
Overseas, the Chengdu Ban Bien Jie project continued to perform remarkably well with recorded sell-out for both its residential and townhouse components. We have sold 92% of the project, while construction for Phase 2 continues to be on track. To-date, sales take-up has reached over RMB3 billion, or more than Php22 billion. RLC expects to realize earnings from the sale of residential units in China in 2021.
The Company spent a total of Php22.15 billion in capital expenditures in 2020 for the development of malls, offices, hotels and industrial facilities, construction of residential projects, land acquisitions, and for new investments for its local operations. We recorded a year-on-year decline in spending, primarily in line with stringent cash conservation measures, quarantine restrictions, construction slowdown, and deferral of non-critical projects.
“Despite unprecedented headwinds, our Company remains stable, strong, and well-positioned to rise above uncertainty. Robinsons Land forges ahead, driven by its purpose of building people’s dreams through quality developments that shape the landscape of the local real estate industry”
Despite unprecedented headwinds, our Company remains stable, strong, and well-positioned to rise above uncertainty. Robinsons Land forges ahead, driven by its purpose of building people’s dreams through quality developments that shape the landscape of the local real estate industry. We will continue to invest in our diversified business and in enduring digital transformation strategies to create greater value for our stakeholders.
The Commercial Centers Division aims to bring prime commercial developments closer to consumers by expanding into the provinces. In 2021, we will push through with the opening of a mall in La Union and the expansion of Robinsons Place Antipolo and Robinsons Place Dumaguete, which were originally scheduled in 2020. We also target to re-open our mall in Tacloban after its rehabilitation. These four projects will add 6% to our total leasable space, boosting our mall portfolio to approximately 1.60 million sqm by the end of 2021. In 2022, we plan to expand our footprint in Luzon with a new mall in Gapan, Nueva Ecija, which will increase our mall gross leasable area to 1.63 million sqm.
On the digital front, the Commercial Centers Division will strengthen its online presence with the launch of an e-commerce platform that enables shoppers to purchase from multiple Robinsons Malls partner tenants in a single transaction. This promising innovation will provide seamless shopping experiences in today’s multi-channel environment.
The Office Buildings Division will further solidify its position as one of the major IT-BPM office space providers in the country. In 2021, we target to complete five (5) new office developments, namely, Cyber Omega, Cybergate Iloilo 1, Cybergate Galleria Cebu, Cybergate Bacolod 2 and Bridgetowne East Campus which will grow net leasable space by 18% to 721,000 sqm. In 2022, we will complete GBF 1 building located in our Bridgetowne Estate which will boost our office portfolio by 7% to 774,000 sqm.
In preparation for the anticipated recovery of domestic tourism in the near-term, the Hotels and Resorts Division plans to increase hotel room count by 10% to over 3,400 operational rooms with the opening of Summit Naga, Summit GenSan, Go Hotels Naga and Go Hotels Tuguegarao. In 2022, we intend to launch Fili Urban Resort, the Philippines’ first ever five-star homegrown hotel, and Westin Sonata, our fourth international hotel. These new properties will push total hotel room count up by 19% to over 4,100 rooms by the end of 2022.
For our Residential Division, we believe that the macro fundamentals remain to be intact for the reinvigoration of demand in residential projects that are mainly fueled by solid OFW remittances, attractive lending rates, and the availability of mortgage financing from banks. We will continue to monitor key developments and trends in the residential property market, alongside economic and consumer indicators, to guide our business strategies.
As we keep abreast of market conditions, we are also preparing to launch the results of our rebranding strategy aimed at creating a cohesive brand identity that better resonates with our target customers. From the previous vertical residential groupings of Luxuria, Residences, and Communities, the Residential Division will now banner its products under a single, integrated brand - RLC Residences. We expect to optimize resources and increase brand mindshare as a result of this simplified structure.
The Industrial and Integrated Developments Division will continue to make substantial progress in our landmark Destination Estates—the 30-hectare Bridgetowne in Pasig and Quezon City; the 18-hectare Sierra Valley in Cainta, and the 200-hectare Montclair in Pampanga. To strengthen earnings, the division will likewise explore innovative real estate formats, new business ventures, and strategic partnerships for our mixed-use developments.
For 2021, RLC has earmarked approximately Php20 billion of capital expenditures to be funded through internally-generated cash from operations and borrowings. Our existing landbank in the Philippines now totals to over 800 hectares. To create further opportunities for growth, RLC intends to list a REIT Company to crystalize the value of some of its high-quality mature office assets. Plans for the initial public offering (IPO) of the new REIT Co. in 2021 are subject to SEC and PSE requirements, and other government regulatory approvals.
The Company will also continue to build and sell the remainder of its Chengdu Ban Bian Jie project. The earnings we hope to realize from our international investment shall trickle down to our bottom line in the next two years.
“We will continue to expand our businesses, to diversify, and invest in scale to achieve sustainable profitability and market leadership in the years to come.”
At one of the most challenging times in our history, we worked towards strengthening the Company’s foundation and building long-term agility. As we face the lingering effects of the health crisis, we have mapped out strategies to deal with near-term market uncertainties and to take advantage of investment opportunities that will support our post-pandemic recovery and growth. We will continue to expand our businesses, to diversify, and invest in scale to achieve sustainable profitability and market leadership in the years to come.
Emerging stronger from a year of extraordinary challenges, we would like to express our deepest gratitude to our Board for their ongoing support and guidance as we navigate our path towards recovery and a sustainable future. We would also like to acknowledge our employees who have gone to great lengths to keep serving our customers, partners, and communities even in the most uncertain of times. Their passion, dedication, and invaluable contributions enable the Company to continue transforming dreams into reality.
Lastly, we are incredibly grateful to our shareholders, business partners, patrons and customers for their continued trust and unwavering support in the attainment of our corporate goals. As a Company, we have never been more committed to creating shared success for all.
Maraming salamat po.
LANCE Y. GOKONGWEI
Chairman
FREDERICK D. GO
President & CEO