SM unit posts 8-fold hike in Q1 income

SM Development Corp. (SMDC), the residential property development arm of tycoon Henry Sy Sr., reported a more than eight-fold increase in its first quarter profit to P661 million from a meager P81 million the previous year, mainly driven by realized gains from the first phases of development of its residential projects and the sale of marketable securities.

At the same time, SMDC announced plans to raise about P3.6 billion either through borrowings or a follow-on offering which could include the foreign markets. The money will be used by the company to beef up its landbanking activities and to develop new projects

SMDC vice-chairman and chief executive officer Henry Sy Jr. said the company is well on track to sustaining its gains for the remainder of the year given its strong performance in the first quarter.

Sy said the company is likely to post a more than 10-percent growth in net income this year on the back of higher sales from its real estate products.

SMDC president Roger Cabunag said the company’s Chateau Elysee, a French Meditteranean-inspired condoville project with six clusters located in Parañaque City, and its three-tower condominium project Mezza Residences in Sta. Mesa are "proving to be strong market winners."

Cabunag said Chateau Elysee, which will have a total of 1,533 residential units, is expected to be completed in October 2008. The project, estimated to cost P1.28 billion, has already pre-sold 838 units.

The P2.8-billion Mezza Residences, on the other hand, which will have a total of 2,420 units, is slated for completion in 2008. It is now 52-percent sold.

Cabunag said the company wants to take advantage of the prevailing low interest environment by expanding its real estate portfolio as it seeks to become one of the top property developers in the country.

SMDC is allotting P7 billion for its capital expenditures over the next five years. For this year alone, SMDC is spending up 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-storey condominium along Katipunan in Quezon City); and Grass Residences, a three tower condominium in North Edsa.

Lindenwoods is scheduled for completion by 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.

The company is also considering developing mid-rise condominium projects in Tagaytay where it owns a 14-hectare property. The residential units are priced at between P1 million and P2 million.

The company is also pushing through with its Baguio condo-hotel project, which will rise on a 1.2-hectare property owned by state pension fund Government Service Insurance System.