SM Prime Holdings, Inc., the country’s largest shopping mall developer and operator, will spend P35 billion in the next five years to open new malls and expand existing ones, President Hans T. Sy said yesterday. 

In a briefing after the annual stockholders’ meeting, Mr. Sy said the programmed spending included the P1.8-billion redevelopment plan for the 331,861-square meter SM North EDSA in Quezon City. That redevelopment, which is ongoing and which involves the construction of new buildings, is expected to be completed by the first quarter of 2009. 

‘We have a five-year business plan in place consistent with our expansion growth of P7 billion on average. This does not include the land acquisitions. We are open to acquiring more land if there are good offers and acquiring existing mall business if the opportunity comes in,’ Mr. Sy said.  

SM Prime Holdings Inc. President Hans T. Sy addresses stockholders in the presence of (seated from left) Herbert T. Sy, director; Jose T. Sio, senior vice-president for Finance; Teresita T. Sy, executive vice-president; Jose L. Cuisia Jr., vice-chairman; and (hidden) Henry Sy, Sr., Chairman. — Photo by Jonathan L. Cellona SM Prime currently operates 28 malls. 

SM Prime executive vice-president Jeffrey C. Lim said the firm’s capital requirements would be financed through a combination of internal generated funds and borrowing.  In its annual stockholders’ meeting, the listed company secured shareholders’ approval to increase its authorized capital stock to P20 billion from P10 billion.  However, Mr. Lim said, ‘there is no immediate use for that. What we want to do is prepare the company in taking [sic] more opportunities.’ 

Mr. Lim said SM Prime may acquire malls from competitors, but declined to disclose offers coming from Metro Manila and provincial areas.  This year, SM Prime will boost its gross floor area by 10% to 3.9 million square meters as it opens three new malls in Bacolod, Taytay and Muntinlupa, as well as expand existing malls in Cebu, Pampanga, and Fairview.

The group’s biggest mall, the SM Mall of Asia, will also be expanded to accommodate a science museum and planetarium. Mr. Sy said SM Prime budgeted P250 million for the 3,000-square meter science museum and planetarium, which should be finished by yearend. 

‘We have a foreign group from the US, which has done various planetariums in the US, helping us,’ Mr. Lim said.  The Sy-led company is also developing the Esplanade Susnset Strip, a strip mall in front of the Mall of Asia in partnership with the Salem Group.  Next year, SM Prime will be opening new malls in Tarlac, Naga, Calamba, Baliuag and Marikina. 

‘We will be pursuing both Metro Manila and outside [the capital], although it depends on opportunities, as we have certain requirements in terms of size. Obviously, we will have more chances of acquiring more land in the provincial areas. We are still on [a] binge of acquiring land for expansion, especially in the provincial areas,’ Mr. Sy said. 

‘I think there are a number of opportunities in the provincial area since there are a lot of business process outsourcing [operations] expanding outside. Many of the locators that have talked to us have shown interest in our provincial malls,’ he added.  Asked for first quarter indications, Mr. Lim said SM Prime’s revenues likely grew by 24% to 25%, with Mall of Asia contributing 6% to 7%. He declined to disclose quarterly earnings.

This year, the Sy-led company targets to improve its net income by 10% to 13% from P5.45 billion in 2006.  ‘We are still consolidating the figures. What we have is the initial indication of revenue growth. Net income should be a good one considering revenues increased more than 20%,’ Mr. Sy said.  Meanwhile, SM Prime is still finalizing plans to fold in the Sy family’s malls and other properties in China, which are privately held but carry the ‘SM’ trademark. 

The Sys entered the booming China market by opening three malls in Xiamen, Jin Jiang and Zengdu.  ‘We will be coming up with an announcement in the second half. We have yet to present to the board. There is no decision yet whether to go or not to go. we are still finalizing the details,’ Mr. Lim said.