SM Prime plans P20-B retail bond offer

Integrated property firm SM Prime Holdings Inc. plans to raise as much as P20 billion from the offering of retail bonds,

SM Prime said the offering has a base size of P15 billion and an oversubscription option of P5 billion.

The proposed issuance forms part of the third tranche of the company’s three-year debt securities program of up to P60 billion.

Local credit watchdog Philippine Rating Services Corp. has assigned an issue rating of PRS Aaa, which means the issuer’s capacity to meet its financial commitment on the obligation is extremely strong.

PhilRatings also assigned a Stable outlook, which indicates that the rating is likely to be maintained in the next 12 months.

In coming up with the rating, PhilRatings considered SM Prime’s strong financial profile, solid brand equity, strong operational track record, well diversified portfolio and its construction and expansion of development projects.

SM Prime is one of the biggest integrated property developers in the country and also one of the largest in Southeast Asia based on market capitalization. Over the years, the company has grown into one of the most diversified real estate companies, with business interests in malls, residential, commercial, as well as hotels and convention centers.

PhilRatings said SM Prime’s earnings remained robust with net income growing 15 percent to P20 billion in the nine months ending September 2017 as revenue expanded by 12 percent to P64.7 billion.

The growth was attributed to additional rental revenues from mall expansions, consistent improvement in same mall-sales and higher contribution from residential sales.

“Over the projected period, profitability will remain strong. Revenues will continue to be buoyed by rental fees coming from shopping mall operations, as SMPH continues to expand, construct and open more SM malls,” PhilRatings said.

“Operations will be supported by strong cash flows going forward, with internally-generated cash on an uptrend on the back of robust operating income,” the creditwatcher said.

SM Prime ended 2017 with a total of 67 malls in the Philippines, with a total gross floor area of 8.03 million square meters. Seven new malls – SM CDO Downtown Premier, S Maison, SM Cherry Antipolo, SM City Puerto Princesa, SM Center Tuguegarao Downtown, SM Center Pulilan Bulacan, and SM Center Lemery – were opened last year.

The company also operates seven malls in China. The China malls, with a total GFA of 1.3 million sq.m, located in Xiamen, Jinjiang, Chengdu, Suzhou, Chongqing, Zibo and Tianjin.