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prime Archives | Tan, Frankum & Associates

SM Prime sets P80-billion 2018 capital expenditure for provincial businesses

SM Prime

MANILA – SM Prime Holdings Inc on Tuesday said it has set an P80-billion capital expenditure for 2018 to support the growth and expansion of its businesses in the provinces.

The capex will be allocated to key provincial cities, SM Prime, integrated property and SM malls operator, told the stock exchange.

“We want to take advantage of the fast growing provincial areas in the Philippines with increasing urbanization and commercialization stemming not only from robust domestic demand but also from increasing investments in the country,” SM Prime president Jeffrey Lim said.

SM Prime recently opened SM Center Imus and is set to open SM City Urdaneta Central in Pangasinan and SM City Telabastagan in Pampanga this year.

SM Prime also said it is targeting to launch at least 15,000 residential units this year through SM Development Corp (SMDC) and open its third office building at the Mall of Asia Complex as well as the expansion of Park Inn Hotel in Clark, Pampanga.

Bloomberg earlier quoted SM Prime’s vice president Alex Pomento as saying that the company would also build the first Philippine outlet of Swedish furniture brand Ikea within the Mall of Asia complex.

Source: http://news.abs-cbn.com/business/04/24/18/sm-prime-sets-p80-billion-2018-capital-expenditure-for-provincial-businesses

Prime developer offers new concept

Eastland Heights

It’s a given: a thriving real estate market offers rosy and favorable prospects for further growth and expansion for the industry players.

But being able to tap these highly lucrative opportunities and take advantage of the local market’s increasing purchasing power is an entirely different story altogether.

For one, it would require firms to be adept, to have an extensive knowledge of their consumers, and be attuned to the ever changing demands and whims of the market.

Project differentiation

Even Colliers International Philippines has recognized the need for real estate companies to differentiate their projects in order to stand out from the sea of developments that have since flooded the market.

“Developers are aggressively acquiring large parcels of land that could be developed into masterplanned communities. In the increasingly competitive environment, developers need to distinguish their projects from others,” said Joey Roi Bondoc, research manager at Colliers International Philippines.

Apart from the typical land uses such as office, residential, retail, industrial, and leisure, developers are now incorporating institutional uses such as education and healthcare.

“This strategy proves pivotal to the firms’ sustained growth, since having a diversified portfolio of real estate products enables the developers to reap the benefits from growing sectors of the property market and, at the same time, shields them from any corrections in other sectors that are experiencing stress,” Bondoc further explained.

As such, the name of the game is innovation. It’s now no longer just about delivering buildings with an amenity or two. What has become more crucial for many homebuyers is the overall value proposition of a particular project, that is made even more distinct and appealing by some novel concept that can further enhance one’s quality of living.

And this holds true not only for the newer players in the industry. Even the veterans should constantly step up their game if they are to remain relevant to the market they serve.

The Eastland Heights will have its own iconic 36-hole golf course and country club.

The Eastland Heights will have its own iconic 36-hole golf course and country club.

Pioneering concepts

Megaworld Corp., one of the country’s largest developers known primarily for pioneering innovative lifestyle concepts, is a seasoned player who is stepping up its game anew.

This time, the tycoon Andrew Tan-led firm is introducing another trailblazing concept that will further cement its strong foothold in the market.

Megaworld Corp. by the numbers

Megaworld Corp. by the numbers

Last December, the Megaworld Group announced that it was investing P5 billion over the next five to seven years to develop an integrated lifestyle community called “Eastland Heights” in Antipolo, Rizal.

Through the group’s subsidiary Global-Estate Resorts Inc. (Geri), Megaworld is developing some 640 hectares along Marcos Highway.

“We’re adding a new concept in property development. For the longest time, we’ve been creating integrated urban townships. These are developments that seamlessly integrate the residential, commercial, office and leisure developments in one sustainable community—a concept we call live-work-play,” said Harold Geronimo, AVP and head of public relations and media affairs at Megaworld.

Extended natural amenities

Geronimo noted that the company felt the need to come up with developments that need not have a work component, which is a staple in its integrated urban townships.

He pointed out that the locations of these planned integrated lifestyle communities are not really meant for work, but rather cater more to the needs of the residents.

“More importantly, it has good natural features that will form part of the community’s extended natural amenities. For example, if that area is in the mountain or has a small forest, then those areas will be preserved to become a feature from which the residents can benefit. This time, it’s a live-leisure concept,” he added.

Geronimo declined to disclose how many communities they plan to launch over the short term, but noted that Megaworld is keen on expanding this particular category.

The plan was to launch more developments that are classified as an integrated lifestyle community. These projects are most likely to be put up in key provinces, he added.

According to Geronimo, they expect to attract prospective homebuyers who are looking into developments where they can really enjoy living.

“There is a segment of residents who value these expanded natural amenities such as a forest, or a river. Their priority is not to be located near their workplace but rather to have a place where they can relax,” Geronimo said.

The Eastland Heights will have its own iconic 36-hole golf course and country club, which will occupy around 20 percent of the entire development.

Aside from the golf course, the community will have residential, commercial and retail and institutional components such as a school.

 

Source: https://business.inquirer.net/223264/prime-developer-offers-new-concept

SM Prime mulls REIT listing

SM Prime

SM PRIME Holdings, Inc. can raise between $500 million and $1 billion should it launch a real estate investment trust (REIT) on the stock exchange, an option the company continues to explore amid plans to undertake more reclamation and other projects.

 

Listing a REIT on the Philippine Stock Exchange (PSE) remains an option for the property arm of SM Investments Corp. to finance future projects, its Executive Vice-President and Corporate Information Officer Jeffrey C. Lim told reporters and analysts in an Aug. 4 briefing in Pasay City.

Asked on the sidelines how much SM Prime expects to raise from listing such a trust, Mr. Lim said: “[It’s] dependent on the market but given the size of SM Prime now and the number of malls, I think it can easily be $500 million to $1 billion.”

Mr. Lim cited the potential of launching a REIT in raising capital particularly for the reclamation of 1,500 hectares in Cordova, Cebu. The local government awarded the P138-billion contract to SM Prime last year.

Venturing into the REIT market may allow SM Prime to undertake the Cebu project simultaneously with the reclamation of another 660 hectares of the Manila Bay under a plan awaiting approval from the Office of the President.

SM Prime won separate contracts worth P54.5 billion and P50.19 billion to reclaim and develop around 300 hectares within the jurisdiction of Pasay City and Parañaque City in 2013 and 2014, respectively.

“As you may have known, we have a P60 billion actually in shelf registration for a retail bond and I think the liquidity also in the local market is there that if we are given the go signal, we can immediately start,” Mr. Lim said.

“I think pronouncements from the government seem to indicate that they’re willing to review the REIT implementing rules and regulation so that’s another avenue for us to actually raise the funds for these reclamations,” he added.

Republic Act. No. 9856, which lapsed into law in December 2009, allows for the establishment of REITs or stock corporations using a pool of investor fund to purchase and manage income-generating real estate assets.

SM Prime had intended to launch a REIT sometime in the second half of 2010 to raise $500 million. It would later shelve the plan because of stringent rules on the public float requirement and tax structure.

The Aquino government had applied a 12% value-added tax on initial transfers of assets to a REIT and required 67% of outstanding shares in the trust be passed onto public investors in three years.

“REIT will be good for the Philippine economy as a whole because there will be more investors coming in, there will be more foreign investors also investing in REIT,” SM Executive Vice-President, Chief Financial Officer and Corporate Information Officer Jose T. Sio noted.

“In the case of SMIC, I think the property group, being one of the largest, if not the largest in Southeast Asia, it’s very advantageous for SM Prime, especially the mall and commercial business and the hotel business to be implemented under the REIT listing,” he added.

Aside from expanding its mall and other operations generating recurring revenues, SM Prime is diversifying its residential business with a foray into affordable housing development.

SM Prime intends to build 2,000 to 5,000 affordable housing units within properties spanning at least 20 hectares. The company is investing P1 billion to launch such a development initially in Cabanatuan within the year, Mr. Lim said.

“It’s more of testing the market. Depending on the take up and reception, we’re buying more properties for economic housing — we call it affordable — mostly [in] North Luzon and South Luzon,” added Mr. Lim, who will assume SM Prime’s presidency starting Oct. 1.

Shares in SM Prime closed 65 centavos or 2.22% higher at P29.9 apiece on Friday.

Source: http://www.bworldonline.com/content.php?section=Corporate&title=sm-prime-mulls-reit-listing&id=131568

SM Prime betting big on low-cost housing

SM Prime

SM PRIME Holdings, Inc. expects its low-cost housing business to eventually account for half of the residential business, as the property conglomerate of tycoon Henry Sy, Sr. plans to start selling units at its maiden real estate venture in China next year.

Jose Mari H. Banzon, SM Prime business unit head for primary residential, told reporters last week the integrated property developer plans to start offering this year medium-rise buildings (MRB) and house-and-lot packages with prices ranging from P800,000 to as much as P2.5 million.

“Ultimately, the target is to be half-half: half from high rise [projects] and half from MRBs and house-and-lots, in terms of launches and contribution to revenue,” Mr. Banzon said.

These projects will be gradually launched in phases, he said. The foray into economic housing will account for a tenth of the 12,000 to 15,000 units the real estate firm intends to launch this year with an estimated sales value of P36 billion to P40 billion.

“If you look at demand, [the] affordable [segment] is good. Shortage in housing is big and the biggest backlog is in the lower level,” Mr. Banzon said.

So far, SM Prime has launched two residential projects in Pasay and Tagaytay this year, with 13 to 15 more slated for roll out in new locations for the rest of the year, depending on market conditions.

“Our sales in the first quarter is significantly higher than in the same period last year. It’s still [because of] the backlog. We haven’t really come close to serving it,” Mr. Banzon said.

CHINA PROJECT
In China, SM Prime has started excavation work on its first residential project in Chengdu — a seven-storey development situated beside its shopping mall.

“You cannot start selling until you have reached the ground [level]. We will start selling in the first quarter of next year,” Mr. Banzon said.

The real estate developer is scouting for properties for possible residential projects in first- and second-tier cities in China where demand continues to be strong.

“SMDC (SM Development Corp.) is aggressively looking for land in China,” Mr. Banzon said.

SM Prime is on the third year of a five-year program that entails a capital spending budget of P400 billion to beef up its businesses that will double earnings by 2018.

Without a P7.4-billion trading gain on marketable securities, net income climbed 14% year-on-year to P20.9 billion last year, slightly faster than the 13% jump to P18.39 billion in 2014.

SM Prime is part of SM Investments Corp., which has core businesses in retail, banking and real estate. The family also has interests in gaming, geothermal energy and infrastructure.

Shares in SM Prime added 30 centavos or 1.38% to close at P22 each on Friday.

SM Prime to build P5-b Ortigas towers

SM Prime

SM Prime Holdings Inc., the country’s largest real estate developer, said it will spend between P4 billion and P5 billion to develop high-end office towers near SM Megamall in the Ortigas central business district.

SM Prime vice president for finance Ma. Teresa Cecilia Reyes said the planned S-shaped office towers would rise between SM Megamall fashion hall and Edsa Shangri La Hotel. The area is currently an open parking space.

Global engineering consultant Aurecon said earlier the 50-story office development, called SM Megamall Towers, would have 124,200 square meters of floor area, including three levels of underground parking and above-ground parking.

The SM Megamall Towers will have first-class amenities and will have a direct link to SM Megamall.

Aurecon was appointed by SM Prime to provide structural engineering design services for the SM Megamall Towers.

Aurecon will work closely with Arquitectonica, the architect of the high-rise office building, from the concept engineering phase to the design development.

Aurecon said the SM Megamall Towers would add to its growing portfolio of landmark projects including the Shanghai Tower, the Mapletree Business City and VivoCity in Shanghai, China; Wembley National Stadium in London; Motion Gate in Dubai; and the World Tower Melbourne in Australia.

SM Prime has been building its office portfolio over the past few years in a bid to become one of the leading office developers in the country.

SM Prime under its commercial properties group currently has 318,000 square meters of office space within the Mall of Asia complex in Pasay City.

It recently launched the 16-story FourE-ComCenter with gross floor area of 123,000 square meters while another BPO building is expected to be launched before the end of 2016.

It is also developing similar office buildings catering to the business process outsourcing industry such as the SM Cyber Buildings—a mix of build-to-suit and ready-to-use office spaces in Makati City.

SM Prime has 529,000 square meters of land bank for future office projects.  The company said by 2018, it aimed to have seven BPO buildiongs with 460,000 square meters of gross floor area.

Source: http://thestandard.com.ph/business/198824/sm-prime-to-build-p5-b-ortigas-towers.html