SM Prime plans P20B new bond offer
Photo taken from SM Prime Holdings Facebook account
Property giant SM Prime Holdings is raising as much as P20 billion to expand its real estate empire by offering a new tranche of long term bonds to retail investors.
The new offering – the third tranche of its P60-billion shelf registration of fixed rate bonds approved by the Securities and Exchange Commission (SEC) in 2016 – will have tenors of five and seven years.
In a disclosure to the Philippine Stock Exchange, SM Prime said it had filed with the SEC an application to sell these new fixed rate bonds with a base amount of P15 billion and an oversubscription option of P5 billion.
Local credit watchdog Philippine Rating Services Corp. (Philratings) has given SM Prime’s proposed new issuance its highest rating of triple A or PRS Aaa with a “stable” outlook.
Based on Philratings’ book, obligations rated PRS Aaa are deemed of the “highest quality” with “minimal credit risk.” The issuer’s capacity to meet its financial commitment on the obligation is deemed “extremely strong.”
A “stable” outlook, on the other hand, indicates that the rating is likely to be maintained or to remain unchanged in the next 12 months.
Philratings said the issue rating reflected the following key considerations: “SM Prime’s strong financial profile; its solid brand equity, with a strong operational track record; the company’s well diversified portfolio, with business segments and developments that complement each other; its continuous construction and expansion of development projects, leading to significant growth and cash flows going forward; and management’s solid track record and focused implementation of strategic priorities.”
SM Prime is one of the biggest integrated property developers in the Philippines and also, one of the largest in Southeast Asia based on market capitalization. Over the years, the company has grown into one of the most diversified real estate companies in the country,with business interests in malls, residential, commercial, as well as hotels and convention centers. With its continued construction, improvements and expansion, SM projects have consistently enjoyed strong market reception.
The company’s net income attributable to equity holders of the parent amounted to P20 billion for the nine-month period ended September 30, 2017.
“Over the projected period, profitability will remain strong. Revenues will continue to be buoyed by rental fees coming from shopping mall operations, as SM Prime continues to expand, construct and open more SM malls,” Philratings said.
“Operations will be supported by strong cash flows going forward, with internally-generated cash on an uptrend on the back of robust operating income.”
SM Prime ended 2017 with 67 malls in the Philippines, with a total gross floor area (GFA) of 8.03 million square meters. Seven new malls were opened last year, namely: SM CDO Downtown Premier, S Maison, SM Cherry Antipolo, SM City Puerto Princesa, SM Center TuguegaraoDowntown, SM Center Pulilan Bulacan, and SM Center Lemery.
