SM Prime net profit rises by 90% in H1

Property giant SM Prime Holdings Inc. (SMPH) grew its first semester net profit by 90 percent year-on-year to P18.7 billion due to one-time gains from the sale of marketable securities.

Excluding nonrecurring items, SMPH’s six-month net profit rose by 15 percent year-on-year to P11.2 billion, the firm said in a disclosure to the Philippine Stock Exchange on Monday.

Consolidated revenues grew by 8 percent to P35.9 billion in the first six months of 2015, mainly attributed to growth in rental revenues and income from completed real estate projects.

“The strong financial performance posted by SM Prime in the first half of the year is reflective of the benefits derived from a diversified property portfolio as both rental and developmental incomes contributed to the overall performance of the company. The sustained growth could be attributed to the consolidation of SM Prime, which resulted to a strong balance sheet that allowed us to pursue all projects as planned. We are confident that we can sustain this growth in the long-term.” SMPH president Hans Sy said in the disclosure.

Six-month rental revenues from retail and commercial space—which accounted for 54.2 percent of the consolidated revenues – went up by 10 percent year-on-year to P19.4 billion. New malls and expanded shopping space in existing malls in 2013 and 2014 were seen as contributors.

The newly opened shopping malls included SM Aura Premier, SM City BF Parañaque, Mega Fashion Hall in SM Megamall, SM City Cauayan, and SM Center Angono. These added 652,000 square meters to SMPH’s rental portfolio. On the other hand, same-store rental remained at 7 percent, sustaining the growth posted in 2014.

SMPH also saw an increase in its office property portfolio. Aside from the recently launched SM Cyberwest in Quezon City, SM Prime said the FiveE-com Center at the Mall of Asia complex opened only last May is now fully occupied.

Meanwhile, real estate sales contributed 34.2 percent to the consolidated revenues.  Revenues from residential development were up by 3 percent year-on-year in the first semester to P12.3 billion. These allowed the group to post an 8 percent year-on-year increase in net income to P3 billion.

Growth in the residential business was primarily attributed to an increase in sales and the completion of projects launched in 2010 to 2013, namely: Wind Residences in Tagaytay, Green Residences in Manila, Breeze Residences in Manila, Grace Residences in Taguig, Shore Residences in Pasay, and Trees Residences in Quezon City.

As an indicator of future revenue growth, the housing group’s six-month reservation sales grew by 24 percent year-on-year to 6,868 units in the first half of 2015, translating to a 28 percent increase in value worth P18.8 billion. Most of the reservation sales were for Air Residences, Shore Residences, Shore 2 Residences, Fame Residences and Grace Residences.