New malls lift SM Prime income to P5.8B

Property giant SM Prime Holdings Inc. said earnings rose in the first quarter of 2016 as it opened more shopping malls and booked higher real estate sales.

SM Prime, a subsidiary of taipan Henry Sy Sr.’s SM Investments Corp., said core profit in the first three months of the year increased 12 percent to P5.8 billion while consolidated revenues rose 10 percent to P18.2 billion compared to the same period last year.

Mall revenues during the period jumped 11 percent to P11 billion,  accounting for 60 percent of the total. Gains were driven by new malls and expansion of existing shopping centers in 2015.

“SM Prime’s massive expansion last year propelled our performance this quarter. Our strong balance sheet coupled with consistent recurring revenue and income should allow us to pursue our growth plans this year and in the medium term,” SM Prime President Hans T. Sy said in a statement.

SM Prime has a total of 57 malls in the Philippines and six in China with total retail space of 8.4 million square meters (sqm). These include the newly opened SM City San Jose del Monte in Bulacan, with a gross floor area of 101,000 sqm.

The company is set to open four more malls this year, namely SM City Trece Martires, SM City East Ortigas, Cherry SM Congressional and Cherry SM Antipolo.

SM Prime’s residential group, which contributed 32 percent of consolidated revenues, posted revenues of P5.8 billion in the period being reviewed, up 5 percent. The increase can be traced to the higher construction accomplishments of SM Development Corporation (SMDC) projects launched starting in 2013.

Consolidated costs of real estate inched up by 2 percent to P2.9 billion, mainly due to higher revenues recognized in real estate sales.

SM Prime currently has 28 residential projects in Metro Manila and Tagaytay. It launched two new projects and expanded  existing developments equivalent to 4,000 units in Las Piñas, Bicutan and along Roxas Boulevard.

For the rest of the year, SM Prime is set to launch an additional 10,000 to 12,000 units located on the Mall of Asia Complex and in Tagaytay, Quezon City, Bulacan, Cavite and Cabanatuan.

The commercial properties group, which rose 16 percent to P1 billion in terms of revenues, accounted for 5 percent of the consolidated revenues. The growth was complemented by the opening of SM Cyber West and Five E-Com Center, which have a combined GFA of 171,000 sqm.

The commercial group presently has five office buildings with an estimated gross floor area of 318,000 sqm. ThreeE-Com and FourE-Com Centers are under construction and scheduled for completion in 2017 and 2019, respectively.

The hotels and convention centers business also grew by 22 percent in the first quarter to P617 million in terms of revenue. This was due to an improvement in the average room and occupancy rates, supplemented by the opening of the 154-room Park Inn Clark in Pampanga.

SM Prime will open the 347-room Conrad Manila in June 2016.