PSE Circular for Brokers No. 458-00

February 24, 2000 PSE CIRCULAR FOR BROKERS NO. 458-00 February 23, 2000 Securities and Exchange Commission SEC Building, E. Delos Santos Avenue Mandaluyong, Metro Manila Attention : Director Erlinda Daoang Money Market Operations Department Philippine Stock Exchange, Inc . 4/F, Philippine Stock Exchange Centre Exchange Road, Ortigas Center Pasig City Attention : Ms. Luisa W. Buenaventura Supervisor, Disclosure Department Gentlemen: We submit herewith Ayala Land's unaudited financial results for the year ended December 31, 1999. Ayala Land ended the year on solid ground despite the continued overall softness of the property market in 1999. The Company generated consolidated revenues of P8.94 billion and net income of P2.60 billion. Rentals continued to be the main revenue driver, contributing P2.80 billion or 31% to total consolidated revenues. Ayala Land's shopping centers managed to post a slight increase in rental revenues, made possible by the full year operation of Glorietta 4 and modest rental rate increases implemented during the year. To further beef up the Company's rental properties, plans were completed for the redevelopment of the Greenbelt area at Ayala Center. The redevelopment will commence in April 2000 and will be completed in two years. Ayala Land's office leasing portfolio likewise remained resilient, posting high occupancy rates and slightly higher rental income amid the increasingly competitive environment. Land sales, the next major revenue component, contributed P1.66 billion or 19% to total revenues. Sustained demand for the Ayala Westgrove Heights in 1999 prompted the Company to launch four phases with over 300 lots, bringing the project's cumulative offering to 710 lots. By the end of the year, cumulative take-up since the initial launch in August 1998 was posted at about 80%. An expansion area at the Ayala Heights Quezon City and Ayala Heights Cebu Phase I were almost fully sold by year-end. The financing scheme introduced for Ayala Northpoint in the third quarter enabled the Company to meet sales expectation for the year. Preparations for the March 2000 launch of the Ayala Greenfield Estates, the next residential component of Ayala South, were undertaken. Complementing residential lot sales were industrial lot sales. Laguna Technopark was one of the few industrial estate developers who were able to close deals in 1999. A total of 6 hectares were sold to four new locators. Having limited its exposure to the still problematic high-end condominium sector, the Company generated lower condominium sales of P1.01 billion, equivalent to 11% of total revenues. Sales and construction activities were confined to ongoing projects. Despite tough competition, The Regency at Salcedo realized new sales in 1999, leaving only 12 units in inventory. The introduction of on-site model suites, enhanced payment terms and cash payment incentives increased sales take-up for One Roxas Triangle. Phase 1 of Ferndale Homes was fully taken up during the year, prompting the launch of the 59-unit Phase 2 in November. At the Ayala Life-FGU Center, Ayala Land concluded one of the biggest transactions in the office sector during the year when it sold 3 floors to a multinational company. In 1999, hotel operations contributed P848 million, representing 9% of total revenues. While hotel room supply continued to outpace demand, most hotels adopted a low rate strategy in order to boost occupancy. Hotel InterContinental Manila posted an improved occupancy rate of 74%, partly compensating for the decline in room rates. The Cebu City Marriott Hotel's occupancy rate increased to 68% while its average room rate remained the highest among upper-tier hotels in Cebu. Late in 1999, Oakwood Premier Ayala Center, a luxury serviced apartment project, soft opened. Upon full operations in the first quarter of 2000, the project will offer 306 fully-furnished rooms. Also during the year, the Company rationalized its existing hotel investments and re-evaluated their long-term prospects in relation to Ayala Land's thrust of developing integrated communities. In this context, Ayala Hotels sold its stake in the Davao Insular Hotel. Benefiting from the mass housing sector's recovery, Laguna Properties Holdings, Inc. (LPHI), Ayala Land's mass housing arm, generated revenues of P605 million, 46% higher than 1998 level. This represents a 7% contribution to Ayala Land's consolidated revenues. Booked sales were double that of the previous year. The growth was attributable to a wider range of buyer financing schemes and aggressive sales development program. In 1999, LPHI entered into a joint venture agreement with Acoland Inc. to develop a new middle-income housing community in Cebu. In the same year, LPHI made a key decision to penetrate the low-cost housing segment where real effective demand is huge. The Company expects to launch its initial low-cost housing projects within year 2000. With continued contraction in the construction sector, revenues from construction projects were limited to P499 million or 6% of total revenues. Apart from servicing the Ayala Companies, Makati Development Corporation actively participated in public bidding of government projects and was awarded the contract for a road construction project in the Visayas. Ayala Land's key affiliates continued to embark on new undertakings. In 1999, Cebu Holdings, Inc. launched for sale the City Sports Club Cebu which will further enhance the Cebu Business Park. The sale of club shares has been brisk, with 80% take-up on the 752 shares offered for sale in two tranches. The Ayala Center Cebu enjoyed high occupancy rate of 96%, with average monthly rental rate slightly higher than the previous year. Alabang Commercial Corporation completed the redevelopment of the Alabang Town Center while Lagoon Development Corporation opened the Pavilion Mall. Meanwhile, Pilipinas Makro, Inc. opened its fourth store in Sucat, Paraaque during the first half of the year. Ayala Land's financial position remained resilient. Resources totaled P56.03 billion as of end-1999, slightly higher than end-1998 level. Cash flow from operations was sufficient to fund capital expenditures (capex) and operating expenses. About P4.2 billion was used up for capex in 1999, nearly half of which was utilized for land development projects and land acquisition. The balance was utilized for the commitments on the Company's building projects, commercial centers, infrastructure projects and equity investments. The Company's total debt was kept at relatively low level of P7.87 billion by end-1999, which placed Ayala Land's debt-to-equity and net debt-to-equity ratios at comfortable levels of 0.24:1 and 0.08:1, respectively. The Company remained liquid with a year-end cash position of P5.32 billion and a current ratio of 2.74:1. cdlex For your information. Very truly yours, (SGD.) JAIME E. YSMAEL Vice President and Comptroller