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SM Prime to borrow P5B to help fund P21-B capex for 2012

Posted on December 08, 2011 10:11:19 PM [ BusinessWorld Online ]
BY FRANZ JONATHAN G. DE LA FUENTE

SM PRIME Holdings, Inc., the mall operating arm of the SM Group, has moved to secure a P5-billion loan to fund part of its P21-billion capital expenditure (capex) for next year, a ranking official said on Wednesday.

In a chance interview, Jeffrey C. Lim, SM Prime executive vice-president, told reporters that the mandate to initially raise P5 billion has already been given.

“The amount is actually already committed, but we will draw on the loan early part of next year,” he said. “We have not actually signed the formal documents, but that is the plan.”

The Sy-led mall developer will be tapping international banking institutions ING and ANZ, as well as local thrift bank Rizal Commercial Banking Corp. for the loan facility, which is expected to be inked by the end of the year.

The remaining P16-billion capex balance will be sourced via internally generated funds, Mr. Lim said.

“However, we might increase borrowings by next year, depending on the needs. There are lots of opportunities for the company,” he noted.

SM Prime is also looking to strengthen its presence in China, where it already has four malls in Jiangsu, Sichuan, and Fujian provinces.

“We will open one next year, another in 2013, and (SM City) Tianjin in 2014. We are negotiating with one location right now, measuring around five hectares, in Xinjiang province,” Mr. Lim said.

According to the company’s financial statement, SM City Chongqing, SM City Zibo, and SM Tianjin -- set to become SM Prime’s biggest mall yet -- are already being built.

“We will continue with our practice of looking for properties in tier II and even tier III cities,” he added.

Earlier this year, SM Prime opened SM City Masinag in Antipolo City, and SM City Suzhou in China.

There are also plans to expand SM City Davao in Mindanao and SM City Dasmariñas in Cavite by the end of the year.

SM Prime is also set to open three additional malls in the country by the end of 2011: SM City San Fernando in Pampanga; SM City Olongapo in Zambales; and SM Marketmall in Dasmariñas, Cavite.

These developments bring its total portfolio to 48 malls with an estimated combined gross floor area of 5.9 million square meters.

Meanwhile, currently under construction are SM City Consolacion in Cebu, SM City General Santos, and SM City Lanang in Davao.

SM Prime increased its consolidated net income for the July-to-September period by 15% to P2.14 billion from P1.68 billion in year-ago levels due to mall expansions and store rental growth, while revenues grew by 15% to P6.56 billion.

Shares of SM Prime gained by 0.47% to P12.96 yesterday from P12.90 at its previous close.
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