SM Prime Holdings Inc., the listed property developer of the Sy family, is setting aside P60 billion to P70 billion for next year’s capital spending to fund its mall, offices and hotels development.
Jeffrey Lim, executive vice president and incoming president of SM Prime, told reporters that the company is allotting a “range of P60- to P70- billion” capital expenditures (capex), which is about the same size of the capex spending this year.
The company earlier said it will open six malls in 2016, and seven malls in 2017, which includes one mall in China per year.
“[The 2017 capex is] not just [for]the seven malls, because those seven malls we’ve started [constructing]already, so it will spread out up to next year. And then the ones that we will start early next year will spread to 2018,” Lim said at the sidelines of the Philippine Investment Conference 2016 on Tuesday.
“So the capex of P60- to P70-billion is for the whole year and not necessarily confined to the seven malls,” he added.
In July, SM Prime raised P10 billion from the initial tranche of its P60 billion retail bond issue program under shelf registration with the Securities and Exchange Commission (SEC).
“We have shelf registration of P60 billion, and we have raised P10 billion. So if we need to raise in the first quarter, we just have to go back [to the debt market]…If ever, we will probably do P10 to P15 billion,” Lim said.
During a panel in the forum, Lim said the company is gearing towards development in the provinces, citing Zamboanga and Caloocan as attractive sites to build commercial developments such as malls and offices.
For its Metro Manila projects, the company’s strategy is to “expand malls and developments that are already matured” which meant adding offices, hotels and residential developments, and later on transform the sites into “lifestyle centers,” Lim said.
But asked whether the impending US rate hike at the end of the year will affect the company’s investment, Lim answered affirmative, saying that it can potentially affect sales in the “midterm” period.
“I think that [the rate hike]has been factored in, although I don’t think it will increase that much. I think that probably in the mid-term in 2017 or 2018, so it’s not going to be like one big spike. It’s going to be gradual so we just have to manage and see how we can address that,” the incoming SM Prime president said.
Lim also noted that parent company SM Investments Corp. (SMIC) is expecting to raise the first tranche of its P50-billion bond program before the end of the year.
As of end-June, the group has 58 malls across the country and six in China, amounting to 8.5 million square meters of floor area.
SM Prime is the real estate developer of Henry Sy under umbrella conglomerate SMIC, which also holds other businesses in retail (SM Retail Inc.) and banking (BDO Unibank Inc.). The group also has other non-core businesses through investments in mining, entertainment, and tourism.