SM Prime raises $150 million from equity placement

MANILA, Philippines - Shopping mall giant SM Prime Holdings Inc. has raised $150 million (about P6.55 billion) through a maiden equity placement with top-notch institutional investors in Asia, Europe and the US gobbling up the shares.

In a disclosure to the Philippine Stock Exchange yesterday, SM Prime said it sold 569.6 million common shares at P11.50 each following a successful overnight bookbuilding process that was led by joint bookrunners Macquarie Capital Singapore and CLSA Asia-Pacific.

“This placement is expected to broaden our shareholder base and increase trading liquidity. The strong uptake of the placement affirms investors’ confidence in SM Prime as one of the best property development companies in the Philippines,” company president Hans Sy said.

This marks the company’s first placement since its shares were listed on the stock exchange on July 5, 1994. SM Prime stocks closed unchanged yesterday at P11.98 per share.

Proceeds from the placement will be used to fund its strategic expansion program in the Philippines and China, as well as for general working capital.

Jeffrey C. Lim, the company’s executive vice-president and chief financial officer, said the expansion of its mall portfolio would “further strengthen the company’s geographical reach, increase market share and thus create long-term value to shareholders.”

He said the company is still keen on tapping the real estate investment trust (REIT) market a soon as the implementing rules are finalized.

“This equity fund raising, together with the proposed REIT IPO which will be pursued as soon as the implementing rules are finalized, will put SM Prime in a very strong position to continue growing our businesses,” Lim said.

SM Prime, a unit of the Sy-owned conglomerate SM Investments Corp., is eyeing to raise up to $500 million through its REIT listing. It has already tapped CLSA and Macquarie as advisers for the planned REIT offer.

A REIT is an instrument that trades like a stock on major exchanges. It provides small and large investors with options to participate directly in the ownership of large-scale real estate projects.

SM Prime is forking out 3.58 billion Chinese renminbi (roughly P24 billion) to build four new malls in China – SM Suzhou, which will open in December this year, SM Chongqing (slated for opening in the fourth quarter of 2011), SM Tianjin and SM Zibo in central Shangdong province.

When completed, these malls would bring SM Prime’s total store network in China to eight. SM Prime entered China in 2007 after acquiring the Sy family-owned malls in Xiamen, Jinjiang and Chengdu for $252 million.

When completed, SM Tianjin will emerge as the company’s biggest shopping mall, rising on a 34-hectare property. The project will require an investment of around two billion renminbi (approximately P13.4 billion).

On the local front, SM Prime expects to end the year with a total of 40 malls with a total gross floor area of 4.8 million square meters. 

For the rest of the year, SM Prime will open SM City Calamba today, and SM City Novaliches in Quezon City.

SM Prime reported a 10 percent growth in net income in the first half this year to P3.8 billion on the back of a 17 percent jump in consolidated revenues to P11.3 billion. Rental revenues contributed the biggest share to total, rising 13 percent to P9.5 bilion.