SM Prime Q2 income climbs 10% to P12.8B on property gains

SM PRIME Holdings, Inc. said its second-quarter (Q2) net income rose by 10% to P12.8 billion, bringing first-half earnings to P24.5 billion, up 11% from a year earlier, on the back of higher rental income, real estate sales, and ancillary revenues.

Top line during the April-to-June period increased by 4% to P35.3 billion, SM Prime said in a statement on Monday.

First-half consolidated revenue increased by 5% to P68 billion from P64.7 billion last year.

Rental income from malls, offices, hospitality, and MICE (meetings, incentives, conferences, and exhibitions) took up 60% of total revenues, followed by real estate sales at 29%, and cinema ticket sales, food and beverage, amusement and related offerings at 11%.

Malls took up the largest share of earnings at 69%, contributing P17 billion — up 14% year-on-year — led by new openings, higher foot traffic and strong occupancy.

Income from residential projects went up 2% to P5.1 billion, accounting for 21% of total earnings, on recognized revenue from completed units and prior-year sales.

The office and warehouse segment contributed 7%, with earnings increasing 9% to P1.7 billion on improved warehouse occupancy.

Hotels and convention centers accounted for 3% of total income after contributing P635 million, up 20% from P527 million, due to strong room bookings and a busy MICE calendar.

“The redevelopment and new attractions at our flagship Mall of Asia drove strong foot traffic and tenant sales,” SM Prime President Jeffrey C. Lim said.

“Robust consumer activity and improving business confidence also lifted contributions across our portfolio,” he added.

SM Prime said its capital expenditure (capex) as of the first semester is at P37.3 billion, adding that its P100-billion capex this year is on track.

In a separate virtual briefing, SM Prime Chief Finance Officer John Nai Peng C. Ong said the property developer is eyeing to raise P15 billion to P20 billion from a planned retail bond issuance in the fourth quarter of the year.

Mr. Ong said the proceeds will be used to refinance the company’s maturing loans.

“We are looking at around P15-20 billion in retail bonds that we intend to tap during the fourth quarter of this year,” he said.

“We remain optimistic, backed by strong consumption, lower interest rates and continued recovery in retail and tourism,” the company said.

“With inflation contained and policy easing underway, we expect stronger consumer sentiment to drive demand across our businesses,” it added.

“Our results underscore the resilience of our businesses and the strength of our diversified portfolio. With our capex program progressing as planned, we are well-positioned to drive long-term growth across key markets,” Mr. Lim said.

On Monday, SM Prime shares rose by 3% or 70 centavos to P24 apiece. — Revin Mikhael D. Ochave