SM Prime seeks P30B in loans

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Parent SMIC posts 10% gain to P13.5B in H1 net income

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SM Prime Holdings Inc., the property unit of conglomerate SM Investments Corp. (SMIC), is considering raising P27 billion to P30 billion via debt in order to fund its project pipeline toward 2016 while interest rates are still low.

“We’re working on the 2016 plan, and we might consider raising [funds]…” Jeffrey Lim, SM Prime executive vice president, told reporters after SMIC’s first-half performance briefing.

“In the second half, we might need to raise about P12 billion to P15 billion… We have not decided yet… It could be retail bonds, bilaterals… depending on the cost and alternatives presented,” Lim noted.

“ And in the first half, another P15 billion.”

The fund-raising initiative comes before the US Federal Reserve raises interest rates as well as the upcoming May 2016 presidential elections.

Asked why SM Prime would rather issue P30 billion separately, Lim said: “We don’t want to solicit all at one time… then carry the negative terms of cost. If we don’t need to use the money and if we raise it, we need to pay the cost for that capital.”

The projects for the rest of the year include opening three more malls, 12,000 to 15,000 residential units from subsidiary SM Development Corp., the opening of Conrad Manila at the Mall of Asia Complex as well as the Park Inn by Radisson Clark in Pampanga, and the start of construction of residential projects in Chengdu, China.

In the same event, SM Prime parent SMIC announced a 10-percent growth to P13.5 billion in net income during the first six months from P12.3 billion a earlier. Consolidated revenues increased by 6 percent to P138.9 billion from P130.9 billion.

Excluding extraordinary items, recurring income grew by 13 percent in the first half of 2015.

“Our core businesses continue to deliver good revenue and earnings growth. Earnings growth in property is now in the mid teens, in line with our medium-term goals. The retail group maintained its pace through organic growth and store expansion despite its already significant size and intense competition.

“Our focus on costs across the group resulted in improved operating margins. While we are pleased with the results so far, we are keeping our eyes on the challenges ahead,” SM President Harley T. Sy said.

SM Prime registered a net income of P18.7 billion from P9.8 billion . Revenues rose by 8 percent to P35.9 billion from P33.3 billion.

BDO Unibank Inc. saw its net income improved to P11.74 billion from P11.05 billion. Revenues reached P34.27 billion from P30.53 billion, boosted by the loans and deposits business.

SM Retail Inc. booked P3.1 billion in profit, 13 percent from than P2.8 billion. Total sales increased by 6 percent to P96.7 billion.

For 2015, the Sy-led conglomerate has programmed up to P85 billion in capital spending, the bulk of which will go to property vehicle SM Prime. This will be sourced from internally generated cash (60 percent) and funds raised through debt – either loans or bonds issuance (40 percent).

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