SM Prime allots P10B for capex

Amid a global economic downturn, shopping mall giant SM Prime Holdings Inc. will pursue its expansion program, with a capital budget of P10 billion set for next year.

SM Prime president Hans Sy sounded a positive but cautious note on the company’s prospects next year  but emphasized that the worldwide economic slowdown would not deter SM Prime’s expansion plans.

“We’re cautiously positive but we’re continuing with our expansion program. We’re not pulling back.  We’re not slowing down,” Sy said, noting the big jump in the firm’s October sales despite a slowing economy.

Out of the P10 billion proposed capital budget, P7 billion will go to the construction of new shopping malls and expansion of existing ones, higher than the P6 billion earmarked this year.  The balance of P3 billion, on the other hand, will go to expansion in China.

Up for construction next year are SM Naga which will offer 73,000 square meters of leasable space, SM Rosario (50,000), SM Pamplona (40,000), Rosales (17,000), North Edsa Sky Garden (34,000). All these will provide  an additional 214,000 square meters, bringing end-2009 gross floor area to 4.5 million square meters from the expected 4.3 million square meters this year.

The company’s malls will also increase to 36 by end-2009 from 33 this year.

Sy said the company is also pursuing its expansion in China with plans to put up one new store a year. Its malls in China  are located in highly populated areas in southern and western China, namely, Xiamen, Jinjiang and Chengdu.   

Plans are now underway for the establishment of a mall in Chongquing with two more planned in 2010 and 2011 – Suzhou and Zibo in Guangdong province.

SM Prime chief finance officer and executive vice-president Jeffrey Lim said funding for the expansion will come from a combination of debt and internally-generated cash. “There will be some borrowings, probably half of that. We’re looking at various options whether debt or preferred shares. We’re still evaluating whether we should get it in dollars or peso,” Lim said.

For the remainder of the year, SM Prime will  open SM Supercenter Rosales in Pangasinan and SM City Baliuag in Bulacan. The new Atrium of SM Megamall is also expected to be open for business in November.

SM City North EDSA, and SM City Fairview are also currently undergoing expansion and due for completion in 2009.