SM Prime expects strong performance

Property developer SM Prime Holdings Inc. (SMPH) expects to post a strong performance in the second half of the year, but this may not be enough to surpass its pre-pandemic numbers, such as foot traffic in its malls.

SM Prime President Jeffrey Lim said things are getting better after the government eased the restrictions in Metro Manila and nearby provinces, resulting in a foot traffic “close to pre-pandemic [levels] during weekends” in its malls.

“We believe that even if we’re not able to reach a pre-pandemic level before end of the year, at least we should target between 80 to 90 percent (of 2019 figures). So we are optimistic about the prospect for 2022,” he said.

Lim said the company’s hotel occupancy rate is less than half of the pre-pandemic level at about 45 percent, but it has started to receive tourists in their facilities.

“But we believe that this will continue to improve, because now we are reopening. So we expect that by May or June up to the end of the year we should have a lot in terms of tourist arrivals,” he said.

SM Prime is set to spend some P80 billion this year, some 20 percent or P16 billion will be for land banking and the rest for its projects that may include its foray into the horizontal housing business for locations outside of the city centers.

The company will also build several mid-rise buildings of about four-storeys high and may pause for the development of high-rise projects since the pandemic has disrupted the market and caused the dislocation of workers, according to Jose Mari H. Banzon, the company’s president of the residential division.

The mid-rise projects will be located in Baliwag in Bulacan, Sta. Rosa and Iloilo, which will follow its recent project launch in Cagayan de Oro some two weeks ago.

The horizontal projects, meanwhile, are mostly in Central Luzon such as in Tarlac, Pampanga and also in Batangas, he said. The price range for these projects will be below the value added tax coverage for housing projects at P3.2 million per unit.

SM Prime listed its P30 billion in fixed-rate bond on the Philippine Dealing and Exchange Corp. last week.

The debt is the fourth tranche of SM Prime’s P100 billion worth of bonds under shelf registration at the Securities and Exchange Commission.

John Nai Peng C. Ong, SM Prime CFO, said the company has funded its capital expenditures for the year but they may revisit the market again if the opportunity comes.

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