SM nears deal on Cebu reclamation project

CEBU CITY—The SM Group’s proposed P138-billion reclamation plan in the municipality of Cordova, Cebu—described as the biggest in the Philippines—is taking a step forward with a preliminary agreement with the Philippine Reclamation Authority set for signing toward the end of this month.

Cordova Mayor Adelino Sitoy told reporters on Friday that he was set to seal a memorandum of understanding with the PRA on April 24, 2016.

He said this was still an initial agreement, given that the proposal of SM Prime Holdings Inc., involving 1,500 hectares of reclaimed land, still needed to undergo a Swiss or competitive challenge that would be set by the PRA.

“This is under a PPP [public private partnership framework]. We already had our bidding and I understand the PRA will have their own Swiss challenge with the right for [SM Prime] to match,” he said.

Under a Swiss challenge framework, the government will give rival groups the opportunity to offer a better proposal. SM Prime can then choose to match better offers, if there are any, to win the project. SM Prime and PRA officials could not be immediately reached for comment.

SM Prime and the municipality of Cordova already signed a joint venture agreement in 2015, earlier reports showed. Sitoy said SM Prime will control 49 percent of the project, with the local government unit and PRA controlling the rest.

This would also be the largest land reclamation undertaking of SM Prime, if it pushes through.

The company, the largest mall developer in the Philippines and a subsidiary of Henry Sy’s SM Investments Corp., has a presence in other reclaimed properties like the Mall of Asia complex and Cebu City’s South Road Properties, or SRP, the site of the province’s largest mall, SM Seaside City Cebu. It is also keen on pursuing land reclamation deals in Pasay and Parañaque in Metro Manila.

Sitoy said SM Prime’s Cordova reclamation proposal would likely be a mixed-use development that will include a wharf that can accommodate cruise ships. He said the project will be developed over a period of eight years.

Access to Cordova would also be increased given that a toll bridge linking the town to Cebu City was expected to be finished by 2020. The bridge would be built by Metro Pacific Investments Corp.

SM Prime disclosed this month that it planned to spend P180 billion in three years to sustain its growth. It is set to open five malls in the country this year to end 2016 with 61 malls in the Philippines and six in China with an estimated combined gross floor area of 8.6 million square meters.