SM Prime eyes debt market anew

MANILA, Philippines – Integrated property development firm SM Prime Holdings Inc. could tap the debt market anew in the first quarter of 2017 for its general funding requirements, its top official said.

The company may issue P10 to P15 billion worth of retail bonds next year to raise funds, incoming SM Prime president Jeffrey Lim said.

“We have a shelf registration of P60 billion. We have raised P10 billion so if we need to raise in the first quarter, we just have to go back,” Lim told reporters yesterday on the sidelines of the Philippines Investment Forum organized by CFA Philippines.

In July, the company launched a P10 billion retail bond offer, the first tranche of a three year funding program to cover its expansion program. SM Prime priced the 10-year retail bonds at 4.2005 per annum.

SM Prime has allocated P60 to P70 billion in capital expenditures for next year, slightly higher than the P60 billion it allocated this year.

The company plans to put up seven malls, some of which have already started construction.

“The seven malls we’ve started already. It will spread out up to next year, and then the ones that we will start early next year will spread to 2018. So the capex of P60 to P70 billion is for the whole year and not necessarily confined to the seven malls,” Lim explained.

In the first half of the year, SM Prime reported a 12 percent growth in core net income to P12.6 billion from P11.2 billion a year ago.

This was on the back of consolidated revenues of P39.2 billion during the first half of the year from P35.9 billion generated a year ago.

In terms of sources, mall revenues rose nine percent to P23.6 billion from P21.7 billion of the previous year, accounting for 60 percent of SM Prime’s consolidated revenues.

Lim said the company would focus on expanding in the provinces given rising property prices in Metro Manila.

“Rising property prices have become too prohibitive in certain areas,” Lim said.

He noted, for instance, that in Bonifacio Global City in Taguig City, property prices now go as high as P500,000 per square meters.