SM Prime Holdings to spend P35B over five-year period

By Zinnia B. Dela Peña
The Philippine Star 04/24/2007

SM Prime Holdings Inc. is setting aside P35 billion over the next five years for the construction of new malls and expansion of existing ones as it seeks to further strengthen its dominant foothold in the shopping mall industry.

In a press briefing following its annual stockholders’ meeting yesterday, SM Prime president Hans Sy said the firm is spending P7 billion a year in the next five years for the continued expansion of its shopping mall operations.

Sy said the amount excludes planned landbanking activities and acquisitions. The firm is also planning to acquire malls developed by other entities.

At the end of the five-year period or by 2011, SM Prime expects to have a total of 35 to 40 new shopping centers.

By the end of the year, the company will have a total of 30 malls across the country from the current 28. It is opening three malls this year — SM Bacolod, SM Taytay, and SM Supercenter Muntinlupa, which will add 353,000 square meters in gross floor area (GFA) to bring the group’s total GFA to 3.9 million sq.m.

SM Prime is also expanding its malls in Cebu City, which will make available 107,000 square meters of GFA; Pampanga (18,000 sqm), and Fairview (23,000 sqm).

SM North Edsa is also expected to undergo a major facelift this year, Hans said.

Among the malls to be developed in 2008 are SM Tarlac, SM Naga, SM Calamba, SM Baliwag and SM Marikina, which will have a total GFA of 387,000 sqm.

Aside from this, Sy said the company is planning to put up a 3,000 sq. m. science museum and planetarium at its Mall of Asia along Roxas Boulevard to further increase foot traffic and boost profitability.

"We noticed that this is popular in the United States. We want to bring it here too as part of efforts to serve better the needs of the general public," Sy said.

He said Mall of Asia’s average daily foot traffic has increased to 2.5 million in the first quarter of the year from only between 500,000 to one million a year ago.

Aside from this, SM Prime is raising its capital to P20 billion from P10 billion to allow it capitalize on promising opportunities.

SM Prime executive vice-president Jeffrey Lim said while there is no immediate use for the funds from the capital increase, the group would like to be prepared to take on new challenges or opportunities.

Lim said the company’s performance in the first quarter was quite good with revenues seen to grow by 24 to 25 percent. SM Prime had same mall sales growth of 7 percent during the first quarter.

For the whole of 2007, SM Prime is expected to register a 10 percent to 13 percent increase in its bottom line.

Last year, SM Prime posted a net profit of P5.45 billion, up 10 percent from the previous year on revenues of P13.2 billion, which is an improvement of 21 percent.

Among the malls that opened last year were SM City Sta. Rosa, SM City Clark, SM Supercenter Pasig, SM City Lipa, and the largest mall in the country, the SM Mall of Asia, which accounts for about 11 percent of SM Prime’s total GFA.

SM Prime is a subsidiary of holding company SM Investments Corp. which also has interests in banking, real estate development, and retail.

 

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