SMDC raises capital to P12.4B

Manila, Philippines - SM Development Corp. (SMDC), the residential development arm of the Henry Sy-owned SM Investments Corp., has obtained the Securities and Exchange Commission’s approval of its increase in capitalization from P8 billion to P12.4 billion.

In a disclosure to the Philippine Stock Exchange, SMDC said the new capital, divided into 12.4 billion shares with a par value of P1 will cover a stock dividend declaration and allow it to issue shares for fund-raising activities in the future.

SMDC is planning to raise between P5 billion and P10 billion either from the issuance of debt or a share sale before the end of June this year, to increase its public float to around 30 percent from 16 percent.

Proceeds from the issue would be used to fund its new residential projects under its core SM Residences brand and the MPlace brand that targets a young, mobile market.

Reflecting its bullish stance on the property sector, SMDC is rolling out more than 10,000 residential units this year, more than what it sold in 2010.

SMDC has earmarked P17 billion for capital expenditures this year, up from P12 billion in 2010. The company plans to launch at least five new residential projects including MPlace Bicutan beside SM Bicutan, and MPlace Ortigas, as well as a new project in Makati and the expansion of Mezza Residences in Sta. Mesa, Manila.

Other projects in the pipeline include Wind Residences, a nine-tower, 20-story condominium building in Tagaytay City with an estimated development cost of P12 billion. The project, which falls under the SM Residences brand, will offer a total of 7,758 units when completed in 2015.

Given strong first quarter financial results, SMDC is eyeing a 33 percent growth in net earnings this year to P4 billion on sales of between P25 billion and P30 billion.

With a portfolio of 14 residential projects, the company has already completed its first high-rise development, Mezza. SMDC is set to turn over to customers the last cluster development of mid-rise project Chateau Elysee in Bicutan within the first half.

Also scheduled for turnover this year are Berkeley Residences, Grass Residences Tower 1 in the middle of the year, and Field Residences Tower 2 and 3 in the first half and second half this year, respectively.