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By Likha C. Cuevas-Miel, Reporter
THE middle-income real-estate
business of the SM group said first-quarter profits plunged due to
mark-to-market losses on its investments as a result of volatility
in the local stock market.
In a statement, SM Development
Corp. (SMDC) said its net income fell to P14 million from P661
million a year ago since the value of investments it held for
trading dropped. These losses were “somehow tempered” by the
realized gains from sale of investments amounting to P198 million.
“SMDC still holds substantial
marketable securities in its portfolio as part of its asset
management operations. This will be liquidated to support future
operations,” the firm said.
At end-March, SMDC posted a
125-percent increase in real estate sales to P575 million, resulting
in a 173 percent improvement to P240 million in gross profit from
its property operations.
“We are pleased with SMDC’s
initial results for the year. We have started on the right track, as
evidenced by the doubling of our sales revenues during the first
three months of 2008. The encouraging sales performance of the
company indicates the market’s continued acceptance of our
projects, which drives us to further improve our product and service
delivery throughout the rest of the year and beyond,” Roger Cabuñag,
SMDC president, said.
The company has jacked up its
capital expenditures from P3 billion last year to P4.5 billion this
year, the bulk of which will go to land acquisition and the
remaining to finance five ongoing projects. These include Chateau
Elysee in Parañaque City, Lin-denwoods Residences in Mun-tinlupa
and Mezza, Berkely and Grass Residences in Quezon City.
In addition, SMDC will launch
three residential projects this year, including Sea Residences
within the Mall of Asia complex in Pasay City, Field Residences in
Sucat, Parañaque City, and Wind Residences in Tagaytay City.
Part of the capital spending will
come from cash raised from pre-sold units, augmented by borrowings.
The amount to be secured from lenders “will depend on how we will
sell our units,” Cabuñag told reporters in a briefing.
Despite the rising inflation,
SMDC still sees revenue growth this year on growing demand for
housing. “There is a possibility of a slowdown [in sales take up
but] we believe that our name will carry us through. There is still
a shortage in housing for middle income [buyers],” Henry Sy Jr.,
SMDC chief executive, said.
By year-end, SMDC expects to
increase sales from P3.7 billion last year to P6 billion to P7
billion.
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