SM Prime target: To become largest property firm in SEA

MANILA, Philippines - SM Prime Holdings Inc., the surviving entity in the mega-merger of the SM Group’s property businesses, is crafting an integrated expansion program outlining strategies to sustain the growth of the largest property developer in Southeast Asia, top executives said.

“We will submit the documents now to the Securities and Exchange Commission for approval and then after that we have to sit down with all our business unit heads to put up an integrated development plant for the enlarged group,” said SM Prime chief finance officer Jeffrey Lim.

“We would still continue as to what we have right now but within six months to a year, we should be able to reprogram everything (and) to come up with an integrated development plan,” added SM Prime president Hans T. Sy.

In late May, SM Investments Corp. (SMIC) merged its shopping mall developer SM Prime, residential builder SM Development Corp., private firm SM Land Inc. and upscale Tagaytay Highlands developer Highlands Prime Inc. in a P279-billion transaction that created Southeast Asia’s largest integrated property firm.

SM Prime approved in yesterday’s special stockholders meeting several steps that will result in the merger of SMIC’s property units.

For instance, SM Prime will increase it authorized capital stock to P40 billion from P20 billion. It will also become a mixed-use real property developer.

“We hope to secure all necessary approvals and complete this transaction before the end of the year,” Lim said.

“With the different property units of SM working as one, we can leverage the strengths of each of these units to undertake a wider range of projects, larger in scope in a more coordinated manner,” Sy added.

Moving forward, the malls business will be the heart of the new SM Prime.

“The shopping mall will still be the core (business) in terms of anchoring our lifestyle cities,” Lim said, adding that 60 percent of the business with the integrated SM Prime will be recurring income.

Lim said SM Prime can tap debts for the regional expansion program, which will focus on China.

“Right now we will focus in China. For other regions, we don’t have plans yet but we are always open to opportunity,” Lim said.

SM Prime currently has five malls in China that accounted for 10 percent of the total bottom line. Two more malls are in the pipeline and SM Prime is under final negotiations for three to four other malls in new locations.

The transformed SM Prime will have P284 billion in current assets from P148 billion, revenues of P58.4 billion from P30.7 billion, net income of P17 billion from P10.9 billion and total landbank of 920 hectares from 110 hectares.

After the consolidation, the main operating units of SM Prime will focus on malls, residential, commercial, hospitality and leisure, and lifestyle cities.