SM Prime sets P100-billion capex over 2 years
SM PRIME Holdings, Inc. is allocating P100 billion in capital expenditures in the next two years to expand its mall and residential property businesses.
“We are committed to earmark at least P50 billion per annum over the next two years to achieve our development road map by 2018,” SM Prime President Jeremy C. Lim said during the company’s annual stockholders’ meeting in Pasay City on Tuesday.
SM Prime said 80% of capital expenditures will be used for the development of shopping malls and residential projects, while the rest will be used for landbanking.
This year, SM Prime will be opening five new malls located outside of Metro Manila — SM CDO Downtown Premier in Cagayan de Oro, SM Cherry Antipolo in Rizal, SM Center Tuguegarao Downtown in Cagayan, SM City Puerto Princesa in Palawan and SM Center Lemery in Batangas. This would bring the total number of SM malls in the country to 65 by end 2017.
The property holding firm of the country’s richest man Henry Sy is launching 15,000 to 18,000 residential units in high-rise and mid- rise buildings, and house-and-lot developments this year. It is also looking to start selling its first residential subdivision project in Mabalacat, Pampanga in May.
“This is the first one that became available for us. There is a demand in ( the affordable) segment, that’s with the most backlog in lower economic housing,” Mr. Lim said.
SM Prime is also considering entering the high- end residential segment with a project along Ayala Avenue, Makati City.
In China, the property giant will start pre-selling its housing project, located next to its mall in Chengdu, Sichuan province, before the year ends.
“We have started developments of SM Residences in one of our malls, SM Chengdu. We have started to construct but we are not allowed to pre- sell yet unless we finish the ground level. We expect that to start before the end of the year,” Mr. Lim said.
“It’s really a test market for us, really how the market will respond to an SM Residences development... The plan in the future is to do more but within the shopping center, we will not go on stand- alone residential developments,” he added.
SM Prime is also eyeing more properties to develop in Fujian province. “As far as Fujian is concerned, there are a few talks with certain properties already. Not closing the deal yet, but that’s the direction we’re going into now,” SM Prime Executive Committee Chairman Hans T. Sy said.
The Sy-led developer currently has seven malls in China, namely SM City Tianjin, SM City Xiamen, SM City Jinjiang, SM City Chengdu, SM City Suzhou, SM City Chongqing and SM City Zibo.
ASEAN EXPANSION
Meanwhile, SM Prime is studying the possibility of undertaking residential and mall projects in Association of Southeast Asian Nations (ASEAN) member-countries.
“All these are areas of interest to us, so we are having studies being done right now, not simultaneously but a few countries at a time. Not only in shopping centers but also in the space of residential,” SM Prime Chairman Henry T. Sy, Jr. said.
Asked if they are prioritizing a specific country, Mr. Sy said that this would depend on the results of the studies.
“If the study shows that it has good volume, good marking, good market, good opportunity, then we’re going that way,” he added.
SM Prime is now on the fourth year of a five-year road map that aimed to double its 2013 net income and revenues by 2018. In 2013, the company’s net income stood at P16.3 billion, while revenues were at P59.8 billion. Last year, its net profit hit P23.8 billion, while revenues reached P79.8 billion.
Mr. Lim said this year’s net income will grow by mid-teens, while revenues will grow by double digit.
“This year, we should be in that range, we are positive about that given the initial numbers that we’re seeing. This type of growth is sustainable, sustaining growth on recurring income base,” Mr. Lim said.