SM Prime raises P5B from 5-year floating rate notes

MANILA, Philippines - Shopping mall giant SM Prime Holdings Inc. has raised P5 billion from the successful issuance of five-year floating rate notes.

“The five-year floating rate notes is SM Prime’s first capital market issuance for 2011. The very positive response of financial institutions to the company’s issuance manifests the market’s confidence in SM Prime’s creditworthiness, stability, and growth potential,” SM Prime president Hans T. Sy said.

Among those that subscribed to the issue were Allied Bank of the Philippines and Metropolitan Bank & Trust Co.

First Metro Investment Corp., the investment banking arm of the Metrobank Group of banking tycoon George S.K. Ty, was the sole arranger for the issue.

Proceeds from the issue will be used to fund the firms’s capital expenditures and other corporate requirements.

SM Prime plans to open three malls this year – SM City Masinag in Antipolo City, SM City San Fernando in Pampanga and SM City Olongapo in Zambales. These new branches will open the group’s total network to 43 nationwide with a gross floor area (GFA) of 5.2 million square meters.

Including the SM malls in China, the company’s GFA will reach 5.9 million sqm.

SM Prime is also scheduled to expand two of its existing malls, SM City Davao in Southern Mindanao and SM City Dasmariñas in Cavite.

The country’s largest shopping landlord posted consolidated net earnings of P7.9 billion last year, up 12 percent from P7 bilion in 2009. Revenues climbed 16 percent to P23.7 billion while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 14 percent to P15.9 billion, for an EBITDA margin of 67 percent.

These results include the operations of the three SM malls in China, located in Xiamen and Jinjiang in Southern China, and Chengdu in Central China.

The company’s operations posted a robust 36 percent growth in combined gross revenues on the strength of China’s economy, an improvement in the malls’ occupancy rates, and the expansion of SM City Xiamen through its high-end Lifestyle Center.

SM Prime’s strong overall performance was attributed to the strong economic environment and the sustained high level of personal consumption expenditure driven mainly by income earned by Filipinos abroad and election spending in the first half of the year.