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SM property arm to raise P1B from share sale

Posted on 06:55 PM, May 28, 2010 [ BusinessWorld Online ]

The SM mall and banking group of the Sy family might unload shares equivalent to 5% to 10% in its property arm to raise a minimum of P1 billion to buy more land, an executive said yesterday.
The announcement came a few days after the property developer secured P10 billion from corporate notes.
"Eventually our group might reduce its holdings to give way [to other investors]," Rogelio R. Cabuñag, president and chief operating officer of SM Development, told reporters on Thursday.
"We are targeting [to complete the share sale] towards the third quarter," he added.
The SM group owns about 80% of SM Development, which has a market capitalization of P33.527 billion. The sale of a 5% stake will yield P1.34 billion.
Mr. Cabuñag said there were already offers to syndicate the secondary share offer.
Early this week, SM Development secured P10 billion from three- and five-year corporate notes. Proceeds of the notes issuance will be used for "land banking."
Profits of SM Development are expected to rise by 30% to 50% this year given continued demand for economic housing units. The net income of SM Development ballooned to P1.8 billion last year from P56.8 million the previous year.
Funds to be raised from the secondary offer will be used to buy land in Taguig. "We are looking at properties in Fort Bonifacio. We have one but we want more," he said, adding that there were offers involving a 5,000-square-meter lot in the area.
To date, the property developer owns about 4,000 square meters in Fort Bonifacio, which will be used for an upscale SM Residences project next year.
SM Development has 12 ongoing residential projects, of which 11 are in key areas within Metro Manila. It has one project in the mountain resort of Tagaytay in Cavite.
Shares in SM Development closed higher P6.30 each on Friday from P6.10 on Thursday.

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