Corporate News

By Krista A. M. Montealegre, Senior Reporter

SM Prime to set aside P65B for capex in 2016

Posted on September 28, 2015

SM Prime Holdings, Inc. is keeping its capital spending steady for next year as the property holding firm of tycoon Henry Sy, Sr. builds more malls nationwide.

SM Mall of Asia in Pasay City is seen in this file photo last April 17. -- BW FILE PHOTO
In its preliminary prospectus filed with the Securities and Exchange Commission, the integrated property developer said it would set aside P65 billion for capital expenditures (capex) in 2016, just a tad higher from the P64 billion budget this year.

SM Prime originally estimated its capex would hit P72.3 billion for 2015.

More than half or 52% of the planned spending for 2016 will go to malls, 38% for residential, 7% for commercial and 3% for hotels and convention centers.

For next year, SM Prime plans to open six malls with an aggregate gross floor area (GFA) of 430,669 square meters (sqm).

They are located in San Jose Del Monte in Bulacan (114,186 sqm), Commonwealth in Quezon City (104,218 sqm), Trece Martires City in Cavite (80,715 sqm), Tuguegarao (50,181 sqm), Puerto Princesa in Palawan (59,113 sqm), and its second mall in Urdaneta in Pangasinan (22,256 sqm).

For 2017, SM Prime intends to unveil new malls in Caloocan (102,086 sqm), Dagupan (87,366 sqm) and a second shopping center in Cagayan de Oro (174,399 sqm). They have a combined GFA of 363,851 sqm.

SM Prime will open the expanded mall in Calamba next year. It will also complete the renovations of its shopping centers in Molino and Sucat.

Part of the funds that will bankroll the development of these malls will come from an up to P20-billion bond issuance, the prospectus showed.

SM Prime is on the second year of a five-year program that entails a capital spending budget of P400 billion to beef up its businesses that will double earnings by 2018.

In its prospectus, SM Prime noted the company’s expansion will focus on major cities outside Metro Manila, especially in areas where disposable income is expected to increase significantly and retail space is currently limited.

The firm plans to expand on a selective basis in Metro Manila, developing supercenters -- malls consisting of less than 100,000 sqm -- that are situated between mega malls in Metro Manila.

“SM Prime believes that the current backlog for leases in several of its developments provides an opportunity for further mall expansion,” the listed firm said.

SM Prime -- which is eyeing to grow its overall mall GFA by 8% to 10% per year -- plans to build four to five malls in the Philippines each year for the near term and also opportunistically expand its presence in second- and third-tier cities in China by building one mall per year, subject to market conditions.

SM Prime is part of SM Investments Corp., which has core businesses in retail, banking and real estate. The Sy family also has interests in gaming, geothermal energy and infrastructure.

The property firm’s shares lost six centavos or 0.3% to close at P19.84 apiece on Thursday.