THE Philippine Ratings Services Corp. (Philratings) on Thursday said it assigned a rating of PRS Aaa to SM Prime Holdings Inc.’s proposed bond issue of P10 billion.
 
This offering of SM Prime is composed of P5 billion in principal offer, with an oversubscription option of P5 billion.
 
The bonds are part of the company’s proposed three-year debt securities program of up to P60 billion. The rating for SM Prime’s outstanding bonds amounting to P40 billion was, likewise, maintained at PRS Aaa.
 
PhilRatings assigned a stable outlook for the ratings of the proposed and outstanding bonds.
 
PRS Aaa is the highest rating assigned by Philratings, denoting that such obligations are of the highest quality with minimal credit risk and that the issuing company’s capacity to meet its financial commitment on the obligations is extremely strong.
 
Philratings said its ratings considered SM Prime’s strong financial profile, its solid brand equity and very good operational track record, its well diversified portfolio, with components that complement each other.
 
SM Prime reported net income of P5.98 billion, down by half from the previous year’s P12.77 billion.
 
Consolidated revenues rose 10 percent to P18.2 billion, from P16.65 billion.
 
During the period, the company’s revenues from shopping malls surged 11 percent to P11 billion, from P9.9 billion in the previous year.
 
Mall revenues account for 60 percent of SM Prime’s consolidated revenue, for which 85 percent of it comes from rental income. Growth was largely driven by new malls and expansion of existing malls in 2015 including its new properties in South Road Property in Cebu, Cabanatuan, San Mateo in Rizal, Sangandaan in Caloocan and in Iloilo. These have a total gross floor area of 738,000 square meters. Excluding the new malls and expansions, same-store growth averaged 7 percent, the company said.
 
SM Prime’s residential group, which contributed 32 percent of consolidated revenues, posted revenues of P5.8 billion in the period, an increase of 5 percent due mainly higher construction completion of SM Development Corp. projects launched in 2013 to 2015.
 
The company said it is looking to spend P180 billion as capital expenditures for the next three years to drive growth.
 
It plans to double its net income to P32 billion by 2018 from P16 billion in 2014 after the consolidation of the property business of the SM Group of companies under the listed SM Prime.
 
Hans Sy, SM Prime president, earlier said the firm will continue to build new malls, while expanding existing malls.