SM to develop GSIS property in Baguio

SM Development Corp., a real estate holding firm owned by the Sy family, has inked an agreement with the Government Service Insurance System (GSIS) to develop the state-owned pension fund’s property in Baguio into a residential condominium building.

In a disclosure to the Philippine Stock Exchange, SMDC said it will develop the 10,465-square meter GSIS property along Session Road in Baguio City as a residential condominium project. Under the agreement, GSIS will contribute all its rights, title and interest in the property while SMDC will finance and develop the project.

At the same time, SMDC said it has agreed to assume all rights and obligations of Intercontinental Development Corp. in connection with the latter’s proposal for the joint development of the combined 12,958-square meter GSIS property in Baguio.

SMDC changed its name from SM Fund Inc. in May 1996 to reflect the change in its primary purpose to that of property development, relegating its business of securities investments as a secondary purpose. SMDC is presently carving its niche in the real estate industry, focusing on tourism, gaming, leisure and entertainment projects.

Despite the change in its business direction, SMDC’s operations are still focused on securities investments as the real estate industry remained saddled with various risks. As such, SMDC’s secondary business of investments continue to provide a regular flow of earnings and cash for the company.

SMDC, through its 85.5 percent-owned subsidiary SM Synergy Properties Holdings Corp., has launched the first phase of its maiden project in Bicutan, Parañaque City in 2003. Dubbed Chateau Elysee, this six-story residential condominium is intended to cater to the huge unserved mid-income market.

SM Synergy intends to concentrate its development efforts on projects geared toward different types of residential/housing units while its long-term vision is to become a leading player in this field.

As of end-2003, SMDC reported a net income of P361.3 million or an increase of 16.44 percent from P310.3 million the previous year. The increase was primarily driven by higher sales from investment operations and sale of real estate.

Revenues grew 26.4 percent to P410.1 million from only P324.6 million. Interest income, gain on sale of marketable securities and dividend income took the lion’s share, contributing P156.8 million, P175 million and P43.1 million, respectively.