Rental revenue lifts SM Prime's profit by 70%

SM Prime Holdings, Inc. (SM Prime), the Philippines’ leading integrated property company, booked a whopping 70-percent surge in profit in the first nine months of 2015 on the back of the growth in rental revenues.

Its consolidated net income reached P22.9 billion in January to September from P13.47 billion during the same period last year.

This was inclusive of the P7.4-billion one-time trading gains on marketable securities booked in the first quarter of the year.

On a recurring basis, net income surged by 15 percent to P15.5 billion in the first nine months.

Consolidated revenues rose nine percent to P52.2 billion after third-quarter earnings reached P16.2 billion.

“SM Prime’s expansion across all its various business portfolios since 2013 has driven its strong financial performance this year. We expect SM Prime’s growth to be sustained as we continue to increase our mall footprint by 13 percent this year. We are excited to launch SM Seaside Cebu later this year, a landmark project in the Visayas region. We see Metro Cebu as one of our important growth corridors following our growth track in Metro Manila,” SM Prime President Hans T. Sy said.

Rental revenues from retail and commercial spaces, which contributed 56 percent to the consolidated revenues, increased by 11 percent to P29.4 billion from P26.4 billion.

The growth in rental revenues was mainly driven by rising contribution from the new malls and the expansion of shopping spaces in existing malls in 2013 and 2014.

SM Prime’s real estate sales, which account for 32 percent of the consolidated revenues, grew by 4 percent to P16.6 billion, mainly due to higher sales take-up and construction accomplishment of SMDC projects.

It maintained a total of 52 malls in the Philippines and six malls in China in the first nine months with total retail space of 7.6 million square meters.

SM Prime is set to open its regional landmark, SM Seaside City Cebu, later this month. It is also expanding two existing malls --SM City Lipa in Batangas and SM City Iloilo.

By the end of 2015, SM Prime will have 55 malls in the Philippines and six malls in China with an estimated combined GFA of 8.3 million sqm.

It currently has 27 residential projects in the market, 25 of which are in Metro Manila and two in Tagaytay.

Meanwhile, the Commercial Properties Group has five office buildings with an estimated gross floor area of 318,000 square meters. Five E-com Center will be formally launched this month.

- Interaksyon

Operator of SM malls grows 2014 profit by double-digits

The country’s largest mall developer and operator grew its profit in the low teens in 2014.

In a disclosure to the Philippine Stock Exchange, SM Prime Holdings Inc said its net income rose 13 percent to P18.9 billion last year from P16.7 billion in 2013.

The double-digit growth stemmed from an 11 percent increase in revenue to P66.2 billion from P59.8 billion over the same period.

“The encouraging financial performance in 2014 reiterates that the transformation of SM Prime into a property conglomerate is bearing fruits and trending above management expectations,” SM Prime president Hans T. Sy said.
“We expect this performance to be surpassed this year as the company pursues its 2015 expansion plans with the opening of four new malls, the completion of FiveE-comCenter and the launch of five new housing projects. This is to complement the expansion of existing malls and on-going construction of high-rise residential development projects,” said Sy, one of the sons of the country’s richest man, Henry Sy Jr.

Over half of the company’s revenue came from retail and commercial space rentals, which increased 13 percent to P36.5 billion last year from P32.2 billion in 2013.

The company ascribed the increase in rental revenue to the introduction of new malls and the expansion of existing ones over the past two years, including SM Aura Premier in Taguig, SM City BF Parañaque, Mega Fashion Hall in SM Megamall in Mandaluyong, SM City Cauayan in Isabela province and SM Center Angono in Rizal province. The new malls and expansion added 564,000 square meters to the company’s gross floor area.

Same-store rental revenue increased by 7 percent year-on-year.

SM Prime’s housing group, which accounted for a third of total revenue, grew by 7 percent to P22.2 billion last year from P20.8 billion in 2013. Reservation sales climbed to P35.9 billion in 2014 from P26.3 billion the year before, with most of the increase coming from Shore Residences and Air Residences in Pasay and Makati, respectively.

Cinema ticket sales chipped in P4.3 billion to SM Prime’s total revenue, and grew 14 percent from P3.7 billion in 2013. The company ascribed the increase to the opening of new digital cinemas and a spate of international and local blockbuster movies.

Excluding the new malls and expansion, same-store cinema ticket sales increase by 10 percent year-on-year.

Amusement and other revenue increased by 8 percent to P3.3 billion last year from P3 billion in 2013.

- Interaksyon

SM Prime to open 5 new malls next year

SM Prime Holdings Inc. (SMPH), the umbrella property firm of the SM Group, will continue growing its empire of malls with the planned opening of four to five new branches next year.

Jeffrey C. Lim, chief finance officer of SM Prime, said four of the five malls would be situated in the country, while one would open in China.

“We’re opening four or five, including Tianjin,” Lim said in an interview on the sidelines of yesterday’s ING Finex CFO of the Year Awards.

For the local sites, Lim cited Cebu and Cabanatuan as sure locations for the upcoming malls along with the planned expansion of its mall in Bulacan.

“Given the size that we have now, the new malls would increase our gross floor area (GFA) by another eight percent,” he said.

Over the long term, SM Prime earlier said it intends grow its malls to 85 (74 in the Philippines and 11 in China) with a GFA of 6.95 million square meters (sqm) in 2018.

SM Prime recently opened SM Center Angono in Rizal, its 50th mall in the Philippines.

SM Prime built its very first mall in 1983 on North EDSA and opened it two years after, starting with a GFA of only 125,000 sqm.

Among its 50 malls in the Philippines, three are included on the world’s 10 largest malls, one of which includes SM North EDSA.

The other two are SM Megamall and SM Mall of Asia. Together, these three malls have a combined GFA of 1.4 million sqm.

“We are committed to continue our expansion towards the provincial areas which remains our strategic direction in the Philippines. In almost 30 years, SM Malls have become an important element in every community. We will also continue to expand and improve the look and feel of our existing malls to keep them current and exciting for our customers,” SM Prime president Hans T. Sy said earlier in a statement.

- ABS-CBN News

SMPH: Draws portions of debt facility for China expansion

SMPH has already drawn portions between US$50Mil to US$100Mil from its US$300Mil syndicated loan for its shopping mall expansion in mainland China. The company is spending for the construction of SM Tianjin, which will be its largest shopping center when it opens in 2015 with a total gross floor area of 540,000 sqm. The loan will also fund the development of a new mall in the city of Yangzhou located in Jiangsu province, which will be constructed next year and completed in 2016.

- Col Financial

SMPH: Real estate business puts drag 1Q14 income

1Q14 net income jumps 11.4%. Net income for the first quarter jumped 11.4% to Php4.58 Bil. Revenues rose just 2.7% but EBIT increased 9% to Php6.67 Bil as overall expenses grew at a slower pace. SMPH’s 1Q14 income is slightly behind our estimates due to a weaker than expected real estate revenues but it is in line with consensus estimates.

Rental and other revenues offset real estate weakness. Consolidated revenues grew just 2.7% to Php15.35 Bil. The slow growth was a result of the 17% decline in real estate revenues from Php6.01 Bil to Php5.02 Bil. Excluding real estate revenues, other revenues grew 15.5% to Php10.33 Bil, led by rental revenues which grew 12% to Php8.56 Bil. Same store rental growth of malls grew 7% y/y while the balance of the 12% growth came from new malls opened in 2013.

Real estate revenues to remain low for the year. We expect revenues to remain low throughout the year given the low take up sales last year. Recall that in 2013, take-up sales of SMPH dropped 17% y/y to Php26.3 Bil. We believe this was a deliberate move by SMPH as the group underwent reorganization and does not reflect slowing demand in the sector. We expect changes starting this year as SMPH plans to double its number of projects by 2018.

Lowering income forecast but FV is unchanged. We are lowering our net income forecast for FY14 and FY15 to factor in lower real estate revenues for FY14 and FY15. We lower our FY14 and FY15 real estate revenue forecast by 23% to Php19.74 Bil and Php20.72 Bil respectively. This resulted in a 6.2% and 6.5% decline in our net income forecast to Php19.14 Bil and Php21.64 Bil for FY14 and FY15 respectively. Our FV estimate is unchanged at Php19.41 based on a 10% discount to our NAV estimate of Php21.67. Despite the weak short term outlook on real estate revenues, our outlook remain positive, reinforced by the company’s five-year plan of doubling the number of residential projects by 2018. We maintain a BUY rating on SMPH.

- Col Financial

SM Prime board approves P25B maiden retail bond sale

Photo be Bernard Testa

The board of SM Prime Holdings Inc has approved the property firm's maiden bond issuance to finance its expansion program.

In a disclosure to the Philippine Stock Exchange, the Henry Sy-owned company said its board of directors approved on Monday the offering of up to P25 billion in fixed-rate retail bonds.

The amount includes a P5-billion overallotment option in case of strong demand, SM Prime chief financial officer Jeffrey Lim said in an earlier interview.

The bonds will be sold with tenors of five years and six months, seven and/or 10 years.

Proceeds of the debt issuance will bankroll capital expenditures for its malls, offices and hotel operations. The real estate firm set a capex budget of P70 billion this year.

After the debt sale, SM Prime is looking at a syndicated loan of up to $300 million later this year to bankroll land banking initiatives and the development of its malls in China.

SM Prime is the holding firm for the mall, residential, office and leisure businesses of the Sy family following a corporate restructuring exercise approved by the Securities and Exchange Commission in October 2013.

With the consolidation of the Sy family's real estate assets, the enlarged SM Prime is now in a position to undertake larger scale projects with the participation of all of its business units.

SM Prime is spending P400 billion to expand its businesses that will double earnings within the next five years.

SM Prime’s earnings attributable to equity holders of the parent was flat at P16.27 billion in 2013 as one-time restructuring cost of P1.28 billion weighed on the company’s profit.

- Interaksyon