Joint Message from the Chairman and the President

The year 2020 started off on a high note for the company.  We had just opened Central Bloc, a new mixed-use development in Cebu IT Park (CITP).  This added 54,182 square meters of retail leasable space, two new office towers with a combined 72,172 square meters of office leasable space and 214 rooms at the brand new Seda Central Bloc.  Our commercial leasing business was poised for growth having expanded to close to 400,000 sqm of leasable area or 12% higher than 2019.

We were also looking forward to constructing at full blast and opening of our two co-living facilities:  The Flats in Cebu Business Park and Cebu IT Park as well as the completion of another Ayala Mall in our Gatewalk Central in Mandaue in 2022.

But these were not meant to be.

With COVID-19, we had to quickly and decisively refocus our attention to three key priorities – achieving financial sustainability, creating safe communities and keeping our people engaged.


Achieving Financial Sustainability

The pandemic bifurcated the business world.  While some businesses thrived, others were challenged. This was also seen among our different business lines.

Our office business was steady and continued to grow amid the pandemic with revenues of P963 million, 13% higher compared to 2019.  We maintained 100 percent occupancy across our six buildings in CBP and CITP. We are happy to report that we renewed 100% of the 17,375 square meters of leasable area up for renewal in 2020. We also signed up three new tenants for our recently completed Central Bloc Corporate Center One.

On the other hand, our mall business, which traditionally brings in almost half of our revenue, struggled as a result of the lockdowns.  Cebu suffered a spike in cases which led to strict barangay and city lockdowns, closing of shops and work sites except for essential services, limited mobility and the suspension of public transportation.

We extended up to 70% in rental concessions amounting to P707.4m – to assist our merchants through these trying times. They have been our partners for many years. Although this was a difficult decision, it had to be done.

Gradual recovery in our malls began in August, with gross sales eventually reaching 47% of 2019 levels and occupancy rising to 79 percent in December.

Our hotel business likewise experienced limited operations. We needed to quickly pivot to   serve a new need, shifting from business travel and tourism to serving employees of business process outsourcing companies and corporate clients. Seda Ayala Center Cebu average 74% in occupancy the previous year. In 2020, due to limited operations, combined occupancy for both Seda hotels, occupancy averaged at 35% by yearend. Throughout all this, our hotels continued to operate, remained self-sufficient and still provided livelihood for our 97 hotel employees.

In these difficult times, arduous decisions had to be made. We reined in our spending and cut back as much as 32% of our GAE or General and Administrative Expenses versus the previous year. We prioritized our capital expenditures focusing on projects that met any of 3 criteria: 1) in advance stages of development, 2) committed for delivery to our customers and 3) had an impact on health and safety. As a result of this judicious spending, we cut back 41% of our capex in 2020.

All told, at the end of 2020, we posted revenue of P2.9 billion and a net income of P392 million. This reflects a 39 % and 76% decline in Revenue and NIAT respectively, from 2019.  Despite these challenges, we continued to keep our balance sheet healthy with our debt at P6.3 billion — lower compared to 2019, thus resulting in a debt-to-equity ratio of 0.64.


Creating Safe Communities

For 32 years, CHI transformed nearly 156 hectares of land into Cebu’s prime central business districts. We are very proud of the impact we have had on the regional economy of Cebu being home to close to 50,000 jobs and more than 1,000 business establishments. These are truly noteworthy achievements.

But during the pandemic, it is the focus and attention to the well-being of each and every individual in our estate that we can be particularly proud of.  Be it a locator, a salesperson, a customer, an employee – we took special care to ensure the safety of all.

Our people on the ground enabled us to operate our offices, malls and hotels despite the risks.  This was accomplished by doing the following:

  • First: We strictly and effectively implemented the guidelines set by the IATF and the DOH. Given we were in unknown territory, rules were constantly being adjusted and we needed to quickly adapt and ensure we were always in compliance.
  • Second: We invested in tools such as thermal scanners and sanitation equipment to ensure that people within our developments were kept safe.  Some of our systems, like access to permits and forms, were shifted online to limit physical transactions. At our malls, we introduced A.N.A. or the AyalaMalls Neighborhood Assistant, which gives shoppers easy access to products from our hundreds of merchants from the comfort of their homes.
  • Third: and most important, we had a dedicated and hardworking group of men and women who remained on the ground, manning our estates and facilities through these hard times.  At the start of the lockdown, our property managers from Ayala Property Management Corporation (APMC) stayed on site, away from their families for weeks at a time, just to ensure they can keep our community safe. I would like to thank them for their unwavering commitment, despite the personal sacrifices this entailed.


Keeping Our People Engaged

We are grateful for, and proud of the way our Team CHI stayed dedicated to their responsibilities. They adapted quickly to new ways of working and meeting their commitments to the business, to the locators and customers, and to one another.   Like other organizations, we had to learn new tools and processes to be effective. As we had already started to transition to digital platforms before the lockdown started, there was barely any downtime and were up and efficiently running at full capacity.

Going beyond crisis management, we commend our CHI family for their generosity of spirit.

The employees themselves took part in Ayala Land’s fundraising efforts which generated P83m in donations. The amount was used to provide medical supplies and equipment to COVID-19 designated treatment hospitals and partly to help affected Filipino families through Project Ugnayan. Project Ugnayan is an initiative spearheaded by Ayala Corporation in cooperation with the Philippine Disaster Resilience Foundation (PDRF) which reached out and aided 1.5 million families affected by the pandemic and the loss of livelihood.

In their personal capacity, the employees of CHI responded to the needs of others by helping our outsourced personnel and the residents of the neighboring Barangay Luz in Cebu City.

To help address the need for quarantine facilities for patients with mild COVID symptoms in Cebu City, CHI contributed to the construction of the 350-bed New Normal Oasis for Adaptation and a Home (NOAH) Complex, at the South Road Properties.

On top of this, we still continued to take part in various Ayala Foundation initiatives in Cebu including Brigada ng Eskwela for students, Tuloy ang Byahe for affected jeepney drivers, and the BuyAnihan project where care packs sourced from local farmers and Ayala companies were distributed to neighboring communities.


Looking Ahead

Achieving financial sustainability, creating safe communities and keeping our people engaged, fired up our sense of purpose as a company to build and nurture sustainable communities.

The company remains resilient and strong and when this pandemic is controlled, we are ready and excited to meet the challenge of a V-shaped recovery.

South Coast City, a 26-hectare waterside estate located at the South Road Properties in Cebu City will create a new business and lifestyle address in Cebu.  The project is a partnership between Ayala Land and SM Prime Holdings.  With the combined investment of these leading property developers and the strengthening infrastructure in the area, there is no doubt South Coast City will redefine Cebu’s landscape the same way CBP and CITP have.

As business climate improves, we will resume the construction of Ayala Mall at Gatewalk Central in Mandaue, break ground on our hotel at Seagrove, Mactan and complete our co-living facilities at CBP and CITP.

2021 will be another year of change for CHI as we consolidate with parent company Ayala Land.  With this merger, we expect to achieve operational synergies, more efficient funds management and simplified reporting to government agencies.

This development will also create a wider shareholder base, increasing liquidity and allowing investors to focus on one listed company.

With the merger and a simplified organization, we will be in a better position for growth as we harness the full strength and power of the Ayala Land organization and … the strength of the brand. We look forward to even more projects and estates in the province.

Cebu Holdings was formed in 1988 with the vision to grow economic potential and become a partner in the progress of Cebu. Today, 32 years later, our company has grown with two established PEZA-accredited business districts, and three emerging master planned estates. Over the years, our developments have become platforms for businesses to thrive, and families and individuals to realize their aspirations. The lifestyle destinations we have created have become go-to places for big and small celebrations alike. Our developments have become entwined with the Cebuano way of life.

We are committed to the Cebuanos and will remain attuned to the community’s evolving needs. Together with our stakeholders, we will approach each challenge as a chance to build better. We believe this crisis will pave the way for many opportunities to recover…and grow even stronger.

We thank the Board for your steadfast guidance; all of our employees for your courageous commitment to embrace change; and our shareholders for your support, as we pivot and execute our plans for the future.