SMDC rolling out over 70,000 new units this year

MANILA, Philippines - Amid threats of an oversupply in the residential sector, SM Development Corp. (SMDC) is rolling out more than 70,000 new units this year, valued at P37 billion to sustain the robust take up in sales in the first quarter.

In a briefing following the company’s annual stockholders’ meeting yesterday, SMDC vice-chairman and chief executive officer Henry Sy Jr. said the company is “fully committed to address the needs of the market that is seen to grow even further with the expected improvement in the economy.”

Rosaline Qua, president of SMDC, said the company is launching five new projects this year that will translate to 73,000 fresh residential units, a sharp increase from the 9,000 units developed in 2011.

In the first quarter this year, SMDC grew its net earnings by 33 percent to P1.21 billion as the number of units sold grew 51 percent to 3,684 valued at P8.97 billion or more than double the company’s sales target for the period under review.

Consolidated revenues surged 72 percent to P5.83 billion, of which revenues from real estate operations amounted to P5.61 billion, rising by 72 percent. 

EBITDA went up by 38 percent to P1.49 billion for an EBITDA margin of 27 percent.

The sustained strong interest of numerous homebuyers in SMDC’s various residential condominium projects was matched by a new supply of attractive projects launched last year namely Green Residences along Taft Avenue, Shell Residences in Mall of Asia Complex, M Place @ Ortigas in Pasig, and Mezza II Residences in Sta. Mesa.

“ It reinforces our belief that the Philippines continues to have a huge underserved residential market that longs for affordable homes, a better lifestyle, and the conveniences of strategically located residences,” Sy said.

The company has set a capital spending this year of P20.7 billion this year, significantly higher than the P13 billion spent in 2011. Bulk of the programmed capital budget will go to the construction of ongoing and new projects while about P4 billion has been earmarked for landbanking.

SMDC recently raised around P6.3 billion from the issuance of five-year, fixed rate corporate notes, jointly arranged by BDO Capital and Investment Corporation and Standard Chartered Bank. The issue was oversubscribed, clearly indicating the trust and confidence in SMDC of institutional investors, which were composed of banks, trust companies, and insurance firms.

The company currently has 15 residential projects under its SM Residences brand and two projects under its M Place brand. For the rest of 2012, five more new residential condominium projects will be launched in Metro Manila.

SMDC currently has a landbank of 85 hectares in Metro Manila and 113 hectares in the provinces.

To ensure its long-term growth, SMDC is looking at expanding in China which is seen as the group’s next growth area. “We might start in the latter part of the year or early next year. we want to do it slowly because there’s a real estate problem there. But in the long-term we know we need to be there,” Sy said.