SM Development suffers 31% income drop in Q1

SM Development Corp. (SMC), the property arm of listed investment holding company SM Investments Corp., reported a 31.1 percent drop in its first quarter net income to P71.1 million, from P103.2 million a year earlier, mainly due to higher costs and expenses.

In a financial report filed with the Securities and Exchange Commission, SMDC said revenues reached P149.03 million from January to March this year or nine percent higher than the P136.67 million registered the previous year. Of this amount, P83.6 million came from real estate sales, which accounted for 56.1 percent of total.

SMDC said while interest income fell 23.1 percent to P28.2 million from P36.7 million due to reduced level of investments as a result of payment for cash dividends and project costs, cost of real estate sold surged 173.7 percent to P47.8 million.

Likewise, there was a marked 46.3 percent increase in the interest expense of subsidiary SM Synergy to P6.1 million due to higher level of loan.

SMDC has earmarked around P800 million this year to fund various residential development projects. Among these projects include the completion of Cluster 3 of Chateau Elysee in Parañaque City and the Mezza Residences in Sta. Mesa, Manila, a high-rise residential building.

As of March 31, 2006, the cumulative market take-up of Chateau Elysee Cluster 1 and 2 was 82 percent and 48 percent, respectively. The completion rate of Cluster 1 and 2 as of the first quarter this year is 100 percent and 99.5 percent, respectively, thus allowing SMDC to recognize higher realized profit from previous sales.

Chateau Elysee is a residential condominium project located near SM Bicutan.

SMDC earlier inked an agreement with state pension fund Government Service Insurance System for the development of a residential condominium in Baguio City. To be called Baguio Residences, the project is envisioned as a condotel, servicing residents and visitors of the summer capital.

Another project is the Hacienda Looc, a residential and beach resort community located in Nasugbu, Batangas. The first phase will house a beach resort, a golf course, and residential communities. To continue growing, SMDC remains on the lookout for projects that will deliver better returns to its shareholders.

SMDC targets residential properties near the SM shopping malls. It is also considering ventures in tourism and entertainment to enhance mall operations.