Posted on 10:06 PM, September 08, 2010 [ BusinessWorld Online ]
SM Development Corp., the property development arm of the Sy mall and banking conglomerate, plans to raise fresh capital through a stock rights offering before the year ends.
Funds will be used to acquire more land and bankroll existing projects, the listed property developer told the stock exchange yesterday.
Under the program approved by the firm’s board last Aug. 2, each shareholder can buy one share for every three held, for a total of 1.832 billion shares to be offered.
The offer price has yet to be determined, SM Development said. “We are still keenly evaluating the size that we can raise given market conditions,” a spokesman said.
Paul D. Balaoing, analyst at PCCI Securities, Inc., said in a phone interview it was time for the SM unit to replenish land “for use in the future.”
“Most of the land bank [of SM Development] was used during the time they were aggressively building in Manila last year.
“The real estate sector is banking on the economic cycle ... everyone is expecting continuous recovery so [SM Development] is taking advantage of growth by building additional vertical developments,” he added.
In May, the property developer secured P10 billion in funding from a private placement. The three- and five-year notes have interest rates ranging from 6.5% to 7.5%.
Late in May, Rogelio R. Cabuñag, president and chief operating officer of SM Development, said the Sy family might unload shares equivalent to 5% to 10% in the property firm to raise a minimum of P1 billion to buy more land.
Mr. Balaoing noted: “The market is up right now. [SM Development] can take advantage of this before the end of the year or early next year.”
As of end-June, SM Development had 13 residential projects in the market.
Shares in SM Development, whose profits jumped by 24% to P1.3 billion in the first half due to strong take-up of new projects, dropped by 0.54% or P0.04 to close at P7.26 apiece yesterday.
Meanwhile, sister firm SM Prime Holdings, Inc., the country’s largest mall developer and operator, bagged an award from a Singapore-based real estate association.
SM Prime won the Emerging Markets Highly Commended award from the Asia Pacific Real Estate Association (APREA), the company said in a separate disclosure yesterday.
APREA is a nonprofit industry association promoting investments in the real estate sector through better information for investors, improvements in the region’s general operating environment, and “best practices.”
SM Prime owns and operates 37 SM shopping malls in the country with a combined gross floor area of 4.6 million square meters and average daily foot traffic of 2.5 million.
The company also has three SM malls in mainland China. For the rest of 2010, SM Prime is scheduled to open three new malls in the country and one in China.
Shares in SM Prime, whose consolidated net income jumped by a tenth to P3.8 billion in the first half due to higher consumer spending, climbed by 0.54% or P0.06 to close at P11.18 each yesterday. -- Neil Jerome C. Morales
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