SM Prime allots P63-B for PH, China expansion
MANILA, Philippines - SM Prime Holdings Inc., the country’s largest retail landlord, has set a P63-billion three-year capital spending plan to rapidly expand its presence here and in China in its bid to become a regional player.
SM Prime chief financial officer Jeffrey C. Lim said the company is spending P21 billion each year to build four to five new malls at home and one mall annually in China to take advantage of rising consumer spending.
He said the company plans to open up to 18 malls in the next three years.
He said funding for the massive expansion will come from a combination of internally-generated cash and borrowings.
SM Prime expects to end the year with a total of 46 malls across the country and five in China, with an estimated combined gross floor area of 6.3 million square meters.
Earlier this year, it opened SM City Olongapo in Zambales, SM City Consolacion in Cebu and SM City San Fernando in Pampanga. Three more malls are expected to open in the second half - SM City Gen. Santos in South Cotabato, SM City Lanang in Davao City and SM Chongqing in China.
SM Prime’s four malls in China, located in the cities of Xiamen, Jinjiang, Chengdu and Suzhou, contributed P320 million or seven percent to the company’s aggregate earnings. Combined revenues amounted to P1.27 billion or nine percent of total.
The SM China malls are enjoying healthy increases in rental rates, with average occupancy level now at 95 percent.
SM Prime said it continues to see vast opportunities in China given the world’s second largest economy’s growing population and emerging middle class.
The group is currently looking to acquire five properties in its second biggest market. It wants to reach new markets to further widen its geographical footprint.
The expansion is also in line with the SM Group’s strategy to list its China assets either in Hong Kong or Singapore by 2015 in a public offering that could fetch proceeds worth up to $500 million.