SMDC mulls P5 to P10 billion from global share offer via private placement

MANILA, Philippines -  Tycoon Henry Sy’s real estate development arm, SM Development Corp. (SMDC), is planning to raise between P5 billion to P10 billion from an international equity offering through a private placement.

At the launch of the country’s biggest and first-of-its kind property showroom last week, SMDC vice chairman and chief executive officer Henry Sy Jr. said the offering, which will take place in the first half this year, would boost the company’s public float to around 30 percent, creating more liquidity for its stock.

Proceeds from the issue would be used to fund its new residential projects under its core SM Residences brand and the MPlace brand that targets a young market of urban professionals.

The company remains bullish on the property sector with plans to sell more than 10,000 residential units this year, exceeding sales for 2010.

Sy said SMDC is expected to post a net profit of P4 billion this year, up 33 percent from P3 billion in 2010. Sales are likewise seen to grow to between P25 billion and P30 billion from P22 billion a year earlier.

SMDC has initially lined up four new projects this year, including MPlace Bicutan beside SM Bicutan and MPlace Ortigas, as well as a new project in Makati and the expansion of Mezza Residences in Sta. Mesa, Manila.

With a landbank of over 160 hectares (60 hectares in Metro Manila and 100 hectares outside Metro Manila), SMDC remains on the lookout for properties to acquire to ensure a stronger platform for growth. While the company’s focus will still be in Metro Manila, it is exploring opportunities in Cebu and Davao to further expand its reach.

Other projects in the pipeline include Wind Residences, a nine-tower, 20-story condominium building in Tagaytay City with an estimated development cost of P12 billion. The project, which falls under SMDC‘s SM Residences brands, will offer a total of 7,758 units when completed in 2015.

With a portfolio of 14 residential projects, the company has already completed its first high-rise development, Mezza. SMDC is set to turn over to customers the last cluster development of mid-rise project Chateau Elysee in Bicutan within the first half this year.

Also scheduled for turnover this year are Berkeley Residences in the first quarter, Grass Residences Tower 1 in the middle of the year, and Field Residences Tower 2 and 3 in the first half and second half this year, respectively.

To spur further growth, SMDC is branching out into China with its planned affordable housing project in Xiamen. Other sites being targeted include Jinjiang – the hometown of the retail-tycoon, and Shanghai.

SMDC’s expansion in China will be undertaken through a wholly-owned unit in the process of being organized.

The company earlier said it was looking to spend up to three billion Chinese renminbi for its first two condominium projects in China.