SM Prime allots P56 B for capex

MANILA, Philippines - SM Prime Holdings (SMPH), the Sy family’s listed property and mall developer, is setting aside a capital spending of P56 billion for this year for the development of its mall, residential, commercial, and hotels and conventions projects.

This would increase to P61.4 billion next year, bulk of which or 51 percent would still go to the development of malls, and the rest for the residential, commercial and hotels and conventions, according to documents submitted to the Securities and Exchange Commission (SEC), the corporate regulator.

SMPH said it would fund the 2016 and 2017 capex through recurring income and external financing.

For the external funding component, SMPH yesterday sought the SEC’s nod to issue an initial tranche of 10-year fixed rate bonds worth P5 billion and a shelf registration for P50 billion worth of bonds to be issued within the next three years.

The initial tranche of P5 billion has an oversubscription option for another P5 billion, documents showed.

It would be issued for minimum denominations of P20,000 each and in multiples of P10,000 thereafter.

Of the net proceeds of the P5 billion, P2.419 billion would be used for the development of SM Clark BPO Towers, a commercial building to open this year, SM Sta. Rosa BPO Tower, also slated to open this year, and SM Iloilo Tower, also a commercial building, set to open next year.

Furthermore, P2.075 billion would be used to develop Conrad Manila, a 346-room eight story hotel within the Mall of Asia Complex which is set to open in the second quarter of 2016; SMX Conventions Cebu, a convention center in SM Cebu to open in 2017; SM Hotels North EDSA, a 200-room hotel within the SM City North Edsa complex which is set to open in 2017; SM Hotels Mall of Asia, a 250-room in MOA to open in 2018, and a 20-room serviced apartment also in MOA slated to open in 2018.

If the P5 billion oversubscription option is exercised, SMPH would pour in net proceeds of P4.9 billion for the development of its commercial projects: Three E-com Center, an office development slated to open in 2017; Four e-Com Center set to open in 2018; SRP Cebu to be completed in 2018, Cyber Building 1, to be completed in 2018 and Six E-com Center to open in 2020.

To date, SM Prime has a total of 57 malls in the Philippines and six in China with a total retail space of 8.4 million sqm. This includes the newly opened SM City San Jose del Monte in Bulacan, with a GFA of 101,000 sqm.

The company is set to open four more malls this year namely, SM City Trece Martires, SM City East Ortigas, Cherry SM Congressional and Cherry SM Antipolo. SM Prime also intends to expand its existing malls namely SM City Calamba and SM City Naga.