SM Development earnings plunge on mark-to-market losses

MANILA, Philippines - SM Development Corp. (SMDC), the property unit of investment holding firm SM Investments Corp., posted a net profit of P56 million last year, down from P1.3 billion in 2007, on huge mark-to-market losses.

“The decline was mainly due to unrealized mark-to-market losses from equity investments that held SMDC’s portfolio from its previous business as an asset management company,” SMDC said in a statement.

However, the company said income from real estate operations jumped 116 percent from P513 million to P1.1 billion while gross profit on real estate sales doubled to P1.7 billion.

Realized revenues from real estate operations amounted to P3.1 billion, 56 percent higher than the previous level, brought about by the strong sales uptake of the Grass and Berkeley Residences, coupled with the higher completion rates of Mezza Residences and the completion of cluster six of Chateau Elysee.

For the whole of 2008, SMDC pre-sold a total of 2,622 residential units valued at P5.1 billion. 

“We are pleased by the continued growth in our core business of residential development. Notwithstanding the challenging operating environment we are in, we foresee our residential business to be highly competitive in the market. We will therefore vigorously pursue our pre-selling activities, and at the same time keenly monitor cost efficiencies. We are also committed to deliver the best quality of homes to our customers at the shortest possible turnaround time,” said Roger R. Cabuñag, president of SMDC.

SMDC has five ongoing projects. Chateau Elysee, a six-cluster mid-rise condominium project in Parañaque City, is now in its fifth cluster; Mezza Residences across SM City Sta. Mesa is 95-percent complete with two of its towers due for turnover to homebuyers this March.

Berkeley in Katipunan Road across Miriam College is 22-percent complete, and Grass Residences beside SM North EDSA is 24-percent complete with its first phase. Lindenwood Residences, a residential subdivision in Muntinlupa City, is 99-percent complete.