SM Prime to spend P5B on new projects, acquisitions this year

SM Prime Holdings Inc., the country’s leading shopping mall developer, will spend P5 billion this year for the construction of new malls and acquisition of real estate properties for future expansion.

In an interview with reporters after the company’s stockholders’ meeting yesterday, SM Prime senior vice-president for finance Jose Sio said the capital budget this year is higher than last year’s P4 billion budget.

Sio said funding will come from internally-generated funds. He said the company may, however, tap borrowings should there be an opportunity. "If there’s an opportunity to borrow, we will borrow," Sio said.

SM Prime has a total landbank of 94 hectares in 16 strategic locations, enough for its continuous expansion within the next five years. Set to open this year are SM City Dasmariñas in Cavite, SM City Batangas and SM City Fairview Annex.

Currently under construction are SM City San Lazaro, SM City Molino, SM City Valenzuela and the SM Mall of Asia.

SM Prime expects that by 2005, its total gross floor area will reach 2.8 million square meters.

Sio said the company expects its revenues for the first quarter this year to rise 15 percent from P2.04 billion the previous level.

SM Prime reported an eight percent increase in its net income last year to P4.2 billion from the previous year’s P3.86 billion.

Consolidated revenues went up by 10 percent to P8.8 billion from P8.01 billion, largely due to higher mall and food court lease revenues. Of the total, rental revenues accounted for P6.98 billion or an increase or 11 percent from P6.27 billion in 2002.

Also contributing to the revenue upsurge are the full operations of SM City Bicutan and SM City Cagayan de Oro, which were opened in the last quarter of 2002.

Last year, three new malls were opened: SM City Marilao in Bulacan; SM City Lucena in Quezon; and SM City Baguio.

With the opening of these malls, SM Prime now owns 17 operational shopping centers across Luzon, Visayas, and Mindanao with total gross floor area totaling 2.31 million square meters.

During the company’s organizational meeting yesterday, Henry Sy Sr. was retained as chairman of the board although he relinquished the presidency in favor of his oldest son Hans, who used to be the firm’s senior vice president.

In the same meeting, the SM prime board approved the grant of a 15 percent cash dividend to stockholders of record as of June 15, 2004.