SM Prime set to become Asia’s largest property firm

Tycoon Henry Sy’s flagship property unit SM Prime Holdings Inc. has obtained the approval of stockholders to undertake a P279-billion transaction that will consolidate all affiliate property firms and create what may become Southeast Asia’s largest property firm.

After the consolidation with SM Development Corp., Highlands Prime and SM Land, the emerging entity SM Prime will end up with a market capitalization of over $13 billion, bigger than Singapore’s Capital Land (with $11.9 billion) and Ayala Land (with $9.5 billion).

SM Prime president Hans Sy told reporters after the special stockholders meeting that the company is now “being noticed” in terms of size. All other steps and regulatory approvals needed to flesh out the consolidation are expected to be secured within the year.

As a regional giant, SM Prime will still focus on the Philippines and China.

“For other regions, we don’t have plans yet but we’re open to opportunities,” said SM Prime chief finance officer Jeffrey Lim.

Shareholders on Wednesday approved the amendment of SM Prime’s articles of incorporation to reflect an increase in its authorized capital stock to P40 billion, from P20 billion, alongside a change in the company’s primary purpose to a mixed-use real property developer.

Shopping mall development, however, is still the flagship business of the enlarged SM Prime, with recurring revenues from rental still accounting for 60 percent of the total.

Prior to the special stockholders meeting, the SM property group went on an international no-deal roadshow to explain the rationale for this consolidation. According to company officials, the property firm’s corporate structure will be simplified as it becomes a regional giant with a full range of businesses that can withstand economic cycles.

“All investors were positive, and they understand the rationale in terms of integrating the property group,” Lim said.

Capital spending of different firms under the enlarged SM Prime for 2013 is estimated at P60 billion, based on existing plans.

“But within six months to a year, we will come up with a really integrated expansion plan,” Sy said.