SM unit mulls secondary share offer in H2

SM Development Corp. (SMDC) is planning a secondary share offering in the second half of the year to raise funds for its landbanking activities and the development of future projects.

While SMDC president Roger Cabunag did not say how much the company is planning to raise from the follow-on offering, he said the properties to be acquired are sufficient for development over the next five years.

The company is settting aside P7 billion for its capital expenditures over the next five years. For this year alone, SMDC is spending P1.5 billion to P2 billion for the construction of three new residential projects — Lindenwood Residences, a residential subdivision located in Susana Heights in Alabang; Berkley Residences, a 30-story condominium along Katipunan in Quezon City; and Grass Residences, a three-tower condominium in North Edsa.

Lindenwoods is scheduled for completion in the first quarter of 2008 while Berkley is targeting students, university academic professionals, and upstart families. The units are priced at between P1 million and P4 million.

SMDC chairman Henry Sy Jr. said the company is now in a better position to take a more aggressive stance in the property sector given its improved financial condition.

The company posted a net income of P984 million last year, up 51 percent from the previous year’s P652 million. This was driven by a 66-percent growth in revenues, mainly coming from condominium projects Chateau Elysee and Mezza Residences.

In addition to its real estate operation, SMDC booked gains from the sale of marketable securities amounting to P225 million or 126 percent higher than the year-ago level. Income from interest and dividends, on the other hand, stood at P203 million.

SMDC generated gross profits from real estate of P280 million, three times more than that of the figure posted in 2005. Profits booked mostly came from the Bicutan project, with development almost midway towards completion.

Chateau Elysee is a French Mediterranean-inspired ‘condoville’ with six clusters. Each cluster comes with one-, two-, or three-bedroom units with floor areas of 20, 40, and 60 square meters, respectively.

Launched in late 2006, Mezza Residences is only about five percent complete. It will have four 38-story towers connected by a retail podium. Each of the buildings will have one-, two-, or three-bedroom cuts of 20, 40, and 60 square meters. Mezza Residences is selling a total of 2,420 units, and is expected to be completed in three years.