Vol. XXII, No. 78 [ BusinessWorld Online ]
Wednesday, November 12, 2008 | MANILA, PHILIPPINES
BY DON GIL K. CARREON
SY-LED SM Commercial Properties, Inc. has set up a new unit that will handle the development of real estate that will be leased to a gambling company.
The Securities and Exchange Commission approved the incorporation of the new company called Premiumleisure and Amusement, Inc. SM Commercial Properties subscribed to and paid for almost a fourth of Premiumleisure’s P5-million capital stock, documents from the corporate regulator showed.
In a telephone interview, Corazon P. Guidote, vice-president for investor relations of listed holding company SM Investments Corp., clarified that Premium leisure’s establishment does not signal the SM Group’s entry into gaming operations.
"SM would not be in the gaming business. The new company will basically handle the development of property that would be leased to a gaming operator," she said.
Ms. Guidote said the project would be built at the SM Mall of Asia complex in Pasay City, adding that they were in talks with foreign casino operators. She declined to provide more details.
"It’s hard to give specifics since the negotiations are still not final," she said, adding that the SM group was still waiting for a provisional license from the Philippine Amusement and Gaming Corp. (Pagcor) to build a casino.
The SM group earlier said it would participate in the development of a multibillion-dollar leisure and casino complex at the 90-hectare Manila Bay reclamation area.
Pagcor said companies must invest at least $1 billion, 40% of which must come within the first two years, to qualify for a permit.
So far, only Travelers International, Inc., a joint venture between Andrew Tan-led Alliance Global Group, Inc. and Hong-kong-listed Star Cruises Ltd., has been given a provisional license by Pagcor. Travelers has pledged to invest $1.1 billion in the Manila Bay area.
The state gambling corporation expects the gambling complex to generate $15 billion in investments, create up to 250,000 million jobs and boost foreign tourist arrivals by one million.
Asked whether the SM Group, known more for its mall projects, will make property development for gambling firms a permanent part of its operations, Ms. Guidote said this would depend on future opportunities.
Ramon Jose E. Aguirre, an analyst from property advisory firm Colliers International, said realty developers will profit from gaming-related projects especially with foreign partners backing them up.
In a phone interview, he said these projects could increase in the next few years, but local firms may adopt a wait-and-see approach for the moment given tight credit conditions.