Corporate News

By Krista A. M. Montealegre, Senior Reporter

SM Prime eyes raising P70B via bonds

Posted on April 13, 2016

SM PRIME Holdings, Inc., the property holding firm of the country’s richest man Henry Sy, plans to issue between P50 billion to P70 billion in bonds over a three-year period to bankroll its expansion binge.

On the sidelines of the company’s stockholders’ meeting in Pasay City on Tuesday, SM Prime Executive Vice-President Jeffrey C. Lim told reporters the first tranche of the debt sale amounting to a maximum of P10 billion will be issued towards the third quarter of the year.

The bonds would probably have a tenor of 10 years, Mr. Lim said.

“Out of the total annual capex (capital expenditure) of P60 billion -- P180 billion over three years -- one-third of that will come from external funding,” he said. The three-year capital spending includes expenditures for its operations in China.

SM Prime is following in the footsteps of San Miguel Corp. and Ayala Land, Inc. which took advantage of the recent amendments to rules on shelf registration under the Securities Regulation Code.

SM Prime is on the third 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.

“We believe we should be on track and we will meet our commitment to double our net income in 2018,” Mr. Lim said.

SM Prime is sticking to its plan of opening one mall in China every year with the launch of its shopping center in Tianjin slated before the end of the year, its President Hans T. Sy said.

The SM Tianjin mall is the Philippine integrated property developer’s seventh shopping center in the mainland. With a gross floor area of 540,000 square meters, the new mall would be its biggest in the world’s second biggest economy.

Likewise, the company may start selling its maiden residential project in China this year should it secure the license from the government, Mr. Lim said.

Apart from China, SM Prime is scouting for possible opportunities overseas since the company has been getting a lot of proposals.

“The business model of SM Prime will have to encompass the ASEAN (Association of Southeast Asian) region and probably global in the future,” its Chairman Henry Sy, Jr. said.

This year, SM Prime is venturing into the economic housing segment, offering 2,000 units this year at a price of roughly P1 million each, Mr. Lim said.

“If the 2,000 [units] will do well, we can ramp it up to 3,000 to 5,000 by next year depending on how we are able to execute,” he said.

Shares in SM Prime added 15 centavos or 0.67% to close at P22.65 each on Tuesday.