Posted on 09:20 PM, January 09, 2011 [ BusinessWorld Online ]
SM Prime Holdings, Inc., the country’s largest mall developer, will start commercial operations of seven new malls this year, adding 400,000 square meters (sq. m.) of commercial area for lease.
The mall developer of retail and banking tycoon Henry Sy, Sr. will also pilot test its “public market-to-mall” concept, a partnering with local governments.
This year will see the highest number of new malls opened to the public by the SM group, an executive said late last week.
“We will open seven or eight smaller malls this year,” Jeffrey C. Lim, SM Prime executive vice-president and chief finance officer, told reporters.
The list includes SM Masinag in Antipolo, SM San Fernando in La Union, SM Dasmariñas in Cavite, SM Apalit in Pampanga, SM Commonwealth in Quezon City, SM La Consolacion in Cebu, and SM BF-Sucat in Parañaque.
SM Prime will finance projects through P20 billion in capital allotted this year. The amount has already been secured through debt and internal funding.
“[The Dasmariñas branch] will be a pilot project for us. We are converting a public market into a formal retail mall,” Mr. Lim said.
SM Prime is currently building a mall on a two-hectare lot it had leased from the local government for 25 years.
The lease may be extended for another 25 years.
“We will have a semi-basement for wet and dry markets and the ground floor will be the Hypermarket with some food shops,” Mr. Lim said. The third floor will be for third-party tenants and the fourth floor will be for parking spaces.
Under the agreement, SM Prime cannot increase rental rates for public market tenants beyond the fees approved by the local government.
Mr. Lim said the plan to convert public markets into malls in cooperation with local governments will depend on the success of the pilot test and the availability of lots.
The 30,000-sq.-m. SM Dasmariñas is expected to cost P500 million, half of the benchmark P1 billion for each SM mall.
Meanwhile, some of the new malls like SM Apalit will have 20,000 to 30,000 sq. m. of gross leasable area.
Last year, SM Prime started commercial operations of SM Calamba and San Pablo in Laguna, SM Novaliches in Quezon City and SM Tarlac. This increased SM malls in the Philippines to 40, with an estimated gross floor area of 4.8 million sq. m.
The mall developer has started the construction of SM Davao and the 80,000-sq.-m. SM General Santos in South Cotabato, which will be opened next year.
New malls will help the company hike profits by a double-digit rate this year, Mr. Lim said.
Shares in SM Prime, whose profits rose by 11% to P5.6 billion in the nine months that ended in September last year, dropped by P0.02 to P11.30 each on Friday. -- Neil Jerome C. Morales