SM Prime Holdings allots P36-billion mainly to grow mall business

Sy-led SM Prime Holdings Inc. expects robust growth this year and has set aside P36 billion for capital expenditures, largely to expand its shopping mall business, company officials said Tuesday.

 

Focusing on the malls stems mainly from the rosy economic outlook, president Hans Sy told reporters on the sidelines of the Megamall Building D Launch Tuesday.

 

"It's the economy that we are positive. We don't wait for the economy to grow before we expand but we are looking positively at the economy. We are confident that it is sustainable," he said.

 

In terms of the company's prospects this year, Sy said the outlook is quite positive. "I would say we will also come up with good numbers but we are still fixing up all the details. I cannot say about the entire consolidated entity," he said.

 

On Tuesday, SM Prime launched SM Megamall Building D called The Mega Fashion Hall, adding 86,000 square meters of retail space, making it – at a total of 500,000 sqm – the biggest mall in the country.

 

Many global brands will open their first stores in the Philippines in Fashion Hall, including Denmark’s Vero Moda, Spain’s Pull & Bear and Uno de 50, LA-based Joe’s Jeans, London’s Savile Row and Burton, French shoe brand Nao de Brasil, and US skincare label Philosophy. It will also house Swedish retailer H&M by the third quarter.

 

For the shopping malls, Sy said they expect a 14 percent growth this year as a result of the expansion. 

 

"The contribution of [the expansion] would be half of [the growth] . Expansion is a very good key to increasing revenues because these are mature malls," he said.

 

Up to 75 percent of the P36-billion capex will be allotted to the mall business, executive vice president and CFO Jeffrey Lim told reporters.

 

"Shopping malls will still be the biggest. We are still trying to acquire more properties and we will definitely try to look for land banking," he said.

 

SM Bacolod, SM Iloilo, SM Taytay, SM Lipa Batangas and Mall of Asia will begin expansion this year  and an office building will be constructed within SM North Edsa complex, Lim said.

 

"Including Mall of Asia and the office [building], siguro mga P10 billion yan," he noted.

 

For the Mall of Asia, SM Prime allotted P1.8 billion to develop almost 200,000 square meters of retail space, Sy said. "We're trying to start third quarter this year. We're finishing all the plans because it's such a large project with target completion in 2016," he said.

 

He said office space will continue to contribute at a minimal phase to company revenues. "But we are growing into that and one of the growth areas are in Taytay and North Edsa. These are all new buildings, not on top of shopping malls," Sy said.

 

In May 2013, SM Prime unveiled plans to consolidate all property related-businesses under one roof – a move that will make it the biggest in terms of capitalization among property companies in Southeast Asia.

 

It got the Securities and Exchange Commission approval for the mega-merger in October 2013. The consolidation is targeted for completion in “early 2014,” according to latest materials on the merger. – VS, GMA News