SM Prime to borrow P15B to fund expansion

Posted at 11/12/2012 9:22 AM

MANILA, Philippines - SM Prime Holdings Inc., the country’s largest shopping mall developer and operator, may borrow up to P15 billion in Philippine peso and US-dollar denominated debt early next year to help fund an aggressive expansion program in the country and in China, a top official said.

SM Prime chief financial officer Jeffrey Lim said in a text message the debt will likely be issued in the first quarter or second quarter of 2013 as the developer hopes to take advantage of current low interest rates.

Lim said on Thursday SM Prime is planning to spend about P30 billion next year, of which between P12 billion and P13 billion will be invested in China. The company currently has 46 malls in the Philippines and four malls in China. It is opening its fifth mall in China, called SM Chongqing, next month.

Lim said a large portion of its China budget will be used to build SM Tianjin, which will be SM Prime’s largest shopping center when it opens in 2014. The company is also looking to acquire more raw land in China.

Lim said the company continues to eye locations in Fujian province, where it operates SM Xiamen and SM Jinjiang, as well as new locations such as the Jilin province in northeastern China.

SM Prime recently reported that net income in the third quarter rose 16 percent to P2.48 billion as it opened more shopping centers in the country and as China’s performance improved.

Earnings during the quarter brought net income in the nine months through September to P7.40 billion, up 15 percent, the developer said.

SM Prime said revenues from July to September reached P7.52 billion, for a 15-percent year-on-year increase. For the nine-month period, revenues were up 15 percent to P22.1 billion.

In addition, its nine-month earnings before interest, taxes, depreciation and amortization or Ebitda rose 12 percent to P14.6 billion for an Ebitda margin of 66 percent.

SM Prime shares declined 0.14 percent to P14.58 each on Friday, giving it a market value of P253.3 billion.