SM to raise $740M for PH, China expansion
MANILA, Philippines—Property giant SM Prime Holdings Inc. (SMPH) plans to raise around $740 million from a mix of peso and US dollar-denominated borrowings this year to further expand its footprint locally and in China.
In a press briefing late Thursday, SMPH chief finance officer Jeffrey Lim said that after completing the consolidation of all property units under the holding firm, there is no plan yet to sell shares of the expanded company which is now the largest property firm in Southeast Asia.
“The plan to tap the equity market is shelved for now given the [lower] price of SM Prime, so we will work on other alternative funding options especially on the debt side,” Lim said on the sidelines of a local roadshow conducted in partnership with online stock brokerage COL Financial.
SMPH is now trading at the local stock market at around 34 percent off its 52-week high of P21.90 per share, making it more attractive—from the perspective of a corporate issuer—to take the debt- rather than equity-funding route.
Lim said SMPH is working on a local retail bond offering of around P20 billion ($440 million) for issuance sometime in the second quarter or second half of the year with a tenor of seven to 10 years.
“Apart from the peso [bond issue], we are also looking into a syndication of US dollar [debt] for our China requirements of up to $300 million,” Lim said, adding that this club loan facility would likely have a tenor of five to a maximum of seven years.
Asked whether SMPH was worried about increasing its foreign currency debt exposure given the trend of strengthening US dollar, Lim explained: “The dollar [debt] will be for our China requirements and if ever we will swap that into peso, we will have to hedge that to ensure that there’s no exposure to SM Prime.”
All told, SMPH has earmarked about P70 billion for capital spending this year, accounting for the lion’s share of the P80-billion 2014 group-wide capital outlays planned by parent conglomerate SM Investments Corp.
In China where SMPH is developing one new mall each year, the company recently acquired through long-term lease from the local government another 10-hectare property in the city of Yangzhou in central Jiangsu province, Lim said.
Yangzhou is historically one of China’s wealthiest cities, known at various dynasties for producing great merchant families, poets, painters and scholars.
Proceeds from the planned $300-million debt syndicate, Lim said, would go to landbanking and mall development in China. This new property in Yangzhou, for instance, will be master-planned starting next year and targeted for opening by 2016.
SMPH has five malls operating in China, two more under construction and one will open before the end of the year. Lim said the company was in talks to build on two to three new locations.
The company is set to add close to 600,000 square meters in additional retail space in its portfolio this year with the opening of two local malls—SM Center Angono (Rizal) and SM City Cauayan (Isabela) and one in China, SM Zibo. Aside from new malls, SMPH has expanded existing malls like Megamall in Mandaluyong as well as those in Bacolod and Lipa.
