Leading shopping mall developer SM Prime Holdings is set to raise P7 billion from the sale of debt paper to selected institutional investors by next month.
It is also considering a retail bond debut by the second semester.
SM Prime chief finance officer Jeffrey Lim told reporters at the sidelines of the Philippine Stock Exchange-Asiamoney forum on “consumables markets” that the company would soon complete the documentation of a corporate note issuance with tenors of five, seven and 10 years.
Lim said the sale of debt notes, the initial size of which was set at P5 billion, could be scaled up to P7 billion and would likely be finalized by June 22. The issuance will be arranged by First Metro Investment Corp.
“We’ll see if we need more funding in the second half. Then, I think the option for us will be more retail rather than corporate notes issue,” Lim said.
According to Lim, SM Prime has yet to tap the retail bond market because the financial system is teeming with liquidity that banks have been lending money at attractive rates.
“It’s better for us to get that [funding through corporate notes] because of the shorter process,” he said.
Because corporate notes are issued to no more than 19 institutional investors, this process need not undergo the tedious securities registration process otherwise required for retail bond offering.
“But eventually, if you need bigger amounts because of regulations like SBL [single borrowers limit] and in case of Banco de Oro, DOSRI [lending limits to directors, officers, stockholders and related interests], we may have to tap retail bonds,” Lim said.
This year, SM Prime expects to grow net profit by 11 percent. Last year, SM Prime’s bottom line expanded by 15 percent.
In the first quarter, SM Prime grew its first-quarter net profit by 15 percent to P2.43 billion from a year ago as revenue from new and existing malls expanded.
Consolidated revenues grew by 16 percent to P7.03 billion year on year. The results were attributed to a mix of factors, such as additional capacity from new malls opened in the Philippines in the past two years, a same-store rental growth of 8 percent, and the rising momentum in its China operations.
By the end of this year, SM Prime will have 46 malls in the Philippines and five in China with an estimated combined gross floor area of 6.3 million square meters.