SM Prime may downsize some mall projects

ABS-CBN News

Posted at Jun 30 2008 12:23 AM | Updated as of Jun 30 2008 08:23 AM

By Zinnia B. Dela Peña
The Philippine Star


Shopping mall giant SM Prime Holdings Inc. may downsize some of its mall projects as consumers hold back on spending amid tough economic conditions, marked by soaring prices of oil, food and other necessities.

SM Prime president Hans Sy said the company may not spend the entire P6 billion budget allotted this year given the prevailing economic downturn. He said the construction of new malls would continue although there might be a need to reconfigure retail space in view of the difficult business environment.

Sy also noted the rising prices of construction materials like steel and cement.

This year, SM Prime is expected to open three new shopping malls to bring its total branch network to 33. These new malls are SM City Marikina, SM City Baliuag in Bulacan and SM Supercenter Rosales in Pangasinan.

SM Marikina will provide an additional 122,000 square meters of gross leasable space, SM Rosales (31,000 square meters) and SM Baliuag (61,000 square meters).

SM Prime is also expanding SM Megamall and SM City Fairveiw.

By year-end, total gross floor area will reach 4.2 million square meters.

The P6-billion capital budget does not include plans to expand SM’s presence in China with the acquisition of three new malls in Xiamen, Jinjiang and Chengdu.

SM Prime recently raised P3 billion through the issuance of fixed-rate debt notes with maturities of five years, seven years and 10 years from issue date. The issue was oversubscribed, attracting 16 primary institutional lenders.

The amount raised will be used for ongoing capital expenditure and general corporate requirements.

SM Prime earlier reported that its first quarter earnings rose seven percent to P1.6 billion on gross revenues of P3.82 billion.

Rental revenue from all SM malls, which accounted for 85 percent of total revenue, increased by 10 percent to P3.26 billion from the previous level’s P2.96 billion.