SM Investments cites property merger benefits

SM Investments Corp. (SM) highlighted the opportunities in real estate in the Philippines following its recent merger of property assets under property conglomerate SM Prime Holdings Inc.

In a recent forum by the Fund Managers Association of the Philippines held at the SMX Convention Center in Taguig, SM officials cited the benefits of the landmark merger, which transformed SM Prime into one of Southeast Asia’s largest property companies.

According to SM vice chair Teresita Sy-Coson, the SM Group has been “particularly active” with developments across all its core businesses in banking, retail and property, which is indicative of the Philippine economy’s growth story.

“The reason why we merged the residences, malls, hotel, commercial, leisure and other land bank under SM Prime was to create a property company that is strong and well positioned for the future,” Coson said.

SM continues to have faith in the growth of the Philippine property sector which is just emerging, she added.

SM Prime now has access to a significantly larger land bank of over 900 hectares and real estate assets of $13.8 billion, as of the end of December 2013.

“The bigger scale and enhanced capabilities will allow SM Prime to unlock revenue synergies within the group, as well as pursue larger and more attractive opportunities in the market,” said Teresa Reyes-Agsalud, SM Prime vice president for finance.

She said that part of the strategy of SM Prime is to develop more “lifestyle cities” similar to the 60-hectare Mall of Asia Complex in Pasay City, which will optimize land where premiere malls currently stand.

SM Prime hopes to replicate such lifestyle cities in SM Clark in Pampanga where the company already has an existing mall; SM North Edsa;  its rising development SM Seaside City in Cebu; and SM Lanang Premier in Davao.

SM Prime plans to build a Park Inn hotel in Clark. SM North Edsa hosts call center operations in its Annex Building and is adjacent to Grass Residences, while just across the road, SM Cyber West, which is already 100-percent pre-leased since last year, is scheduled for completion in 2014.

SM Seaside City Cebu, which will open in 2015, sits on a 30-hectare lot and will house a 400,000-square-meter mall to be followed by another SM Arena. SM Lanang Premier, which was opened in 2012, is next to Park Inn Hotel and includes an SMX Convention Center.

SM SVP for Investor Relations Corazon Guidote also cited the Mall of Asia complex as a classic example of how commitment, taking a long-term position, proper planning and execution on a development could unlock significant value not just for shareholders but for the whole city of Pasay.

“When I joined SM, there was just the mall in MOA. Now, you have the mall, SMX, the MOA Arena, and the offices and residences, which are interrelated in terms of operations. These developments enhanced the value of the land in MOA by over 23 times since the late 1990s, even prior to the property merger,” Guidote said.