SM Prime sets P33B for new developments, upgrades

SY-LED SM Prime Holdings, Inc. is allocating up to P33 billion this year for the expansion and development of its commercial real estate portfolio.

Around P21 billion will be allocated to expanding the gross floor area (GFA) of the company’s malls, SM Prime said in a regulatory filing on Thursday.

“We expect moderating inflation, easing interest rates, and election-related spending to fuel our growth in 2025,” SM Prime President Jeffrey C. Lim said.

New mall developments will add 205,400 square meters (sq.m.) of GFA, while 124,488 sq.m. of existing mall space will undergo redevelopment.

SM Prime expects to have 8.08 million sq.m. of GFA for its mall portfolio by year-end. The company currently operates 87 domestic malls. 

“Election-related expenditures, a cyclical driver of economic expansion in the Philippines, are anticipated to stimulate aggregate demand and spending in various sectors, particularly retail,” the company said.

“SM Prime’s extensive network is strategically positioned to capture this surge, bolstered by strong consumer confidence and increased foot traffic,” it added.

For its hospitality and meetings, incentives, conferences, and exhibitions (MICE) businesses, SM Prime will invest about P6 billion to construct two convention facilities, renovate hotel rooms, and add new food and beverage facilities in existing hotels.

The property developer will also invest P6 billion to develop new office towers and workspaces, driven by strong demand and gains in lease take-up of existing inventory. 

One of the new projects is the two-tower Six E-Com Center office project within the Mall of Asia Complex, which will cater to technology-driven industries and business process outsourcing (BPO) companies.

“Our malls should do well, and our office, hotel, and convention centers could provide additional upside,” Mr. Lim said.

The Philippine government is targeting a 6-8% gross domestic product (GDP) growth this year, faster than the 5.6% achieved last year. 

Meanwhile, SM Prime’s parent company, SM Investments Corp. (SMIC), bagged the Philippine Capital Market Deal of the Year award from the International Financing Review Asia for its issuance of a $500-million five-year bond in July 2024.

Listed on the Singapore Exchange, the bond issuance was 3.2 times oversubscribed, with final demand reaching $1.6 billion. It was part of SMIC’s European medium-term notes program.

“This landmark transaction represents a major milestone for both SM Investments and the Philippine capital markets. The strong demand from investors reflects confidence in Philippine corporate issuers and underscores SM’s reputation as a stable and well-managed investment option,” SMIC Executive Vice-President Erwin G. Pato said.

On Thursday, SM Prime shares fell by 1.35%, or 35 centavos, to P25.65 apiece, while SMIC stocks dropped by 0.48%, or P4, to P826 per share. — Revin Mikhael D. Ochave