SM unit mulls more housing projects

By JENNEE GRACE U. RUBRICO, BusinessWorld Senior Reporter After selling 50% of the units for its most recent project within three months after the launch, SM Development Corp. (SMDC) is eyeing more housing projects on properties beside SM malls. The publicly listed firm is also looking at more joint-venture projects with other members of the SM group of companies. To "catch up" with other major property developers, SMDC is also earmarking capital expenditures of P800 million this year as it gears up the construction of its housing project. The amount, which is higher than last year’s P500 million, will be used for existing projects and for a new project -- a joint venture with the International Development Corp., which is also part of the SM group, for the development of a new phase of Susana Heights, SMDC President Rogelio Cabunag said. This project will be the first horizontal development of SMDC, he added. SMDC is the housing arm of the SM group. Started as an investment company, SMDC launched its first housing project, Chateau Elysee in 2003. In March this year, the firm launched the first tower for Mezza Residences, a high-rise condominium project beside SM City Sta. Mesa. Mr. Cabunag said that the firm has sold 420 of the 825 units that are placed on the market in March. "We’ve sold close to 50% since we launched it in March. We didn’t go to the US yet, but we’ve been receiving inquiries over the Net and there have been some sales," Mr. Cabunag said. He also said that the firm will be going to Europe on a government-arranged road show to market both Mezza and the third phase of Chateau Elysee. SM MALLS With the success of Mezza, Mr. Cabunag said that SMDC is now eyeing residential projects beside the newly opened SM Mall of Asia and other SM malls. "We still have a number of land in the land bank especially those that are adjacent to the malls and these are owned by the members of the group. They still have packets of land in the periphery," he said. For Mall of Asia, Mr. Cabunag said that the group wants SMDC to handle the high-rise condominiums that will be placed in the residential cluster. "This will probably happen next year. We have not done anything yet. It has to be high-rise to recover the cost of the land," he said. He also said that besides these, the firm will also be looking at areas outside Metro Manila. "We still have some properties even outside Manila, we should consider those [properties] where the malls are. Pampanga is also a growing area. They were telling us we should look into it. They’ve been expanding in that area," he said. For this year, however, the firm will be concentrating on two other projects besides Mezza and Chateau Elysee, one of which will be a new phase of Susana Heights. SUBDIVISION "We are working on our Dakota South at Susana Heights. This will be a land development, a subdivision. It’s an old village, but there’s another place we want to develop. The ownership is under one of our affiliates, IDC. There’s a partnership with Madrigals," he said. The 24-hectare development will cater to the middle-income market and will have cuts of 300 to 400 square meters, Mr. Cabunag said. Prices in the area are at P8,000 to P12,000 per square meter, he added. "We should be able to respect that range," he said. Development costs, meanwhile, will be over P1,000 per square meter, Mr. Cabunag said. "Hopefully, this will be launched by the third quarter," he said. The second project that the group will be starting on is the joint-venture project with the Government Service Insurance System in Baguio. "That should commence already. That’s been delayed," he said. SMDC is aggressively developing projects as it shifts its revenue stream from investments in equities and securities to sales of housing projects, Mr. Cabunag said. SM group finalizes acquisition of supermarket units Conglomerate SM Investments Corp. (SMIC) has finalized the acquisition of the supermarket and hypermarket operations of its affiliate firms through a share-swap deal with majority shareholders. In a letter to the Stock Exchange dated June 9, SMIC Executive Vice-President and corporate information officer Jose T. Sio said the company has already executed the transfer documents for the issuance of up to 56 million shares valued at about P12 billion to Supervalue, Inc., and Super Shopping Markets, Inc. In exchange, SMIC would acquire 100% of the outstanding common shares of Supervalue, and 81% of Super Shopping Markets, Inc. Supervalue will keep the remaining 19% stake in Super Shopping. Mr. Sio said the issuance of the SMIC shares would be done upon the approval of the Securities and Exchange Commission of the valuation of the exchange of shares, and the approval by the Philippine Stock Exchange of the additional listing. Super Shopping operates five SM Hypermarkets, while Supervalue, which is the parent of Super Shopping, runs 25 SM Supermarkets. A hypermarket is a combination of supermarket and a department store. ROSTER SMIC earlier said the acquisition would add the supermarkets and the hypermarkets to the company’s roster of retail stores that includes 25 malls. Supervalue plans to open two to three stores while Super Shopping is eyeing four new stores this year. Shares of SMIC closed P8 lower on Tuesday to settle at P210 per share. -- Jeffrey O. Valisno/BusinessWorld