MANILA, Philippines — SM Prime Holdings Inc. is acquiring two properties in China to beef up its land bank for future mall development.

In an interview, SM Prime executive vice president Jeffrey Lim said they continue to look for more sites and are almost done with negotiations for a lot in Xinjiang and is in talks for another property in Quanzhou.

Lim said the Xinjiang lot is about seven hectares while the one in Quanzhou has a size of about eight hectares adding that these will be for mall development only.

He explained that SM Prime’s China expansion will currently be focused on landbanking as it charts its development plan for the next three to five years. The plan includes the opening of three to four malls over the next three years.

Meanwhile, Lim said they are still on track for a planned $500 million initial public offering of its China operations unit between 2013 and 2014.

SM Prime said it is pouring half of its resources this year into its operations in China which is seen to increase its profit contributions until it becomes ripe for a public offering.

SM Prime president Hans Sy said “our capex this year is projected to be at P18 billion of which P9 billion is for China and P9 billion is for the Philippines.”

He explained that this year’s capex is actually lower than the P20 billion spent last year because some planned land acquisitions did not push through in China and the Philippines.

Sy reported that SM’s China operations doubled its earnings contribution to P100 million in the first quarter of this year from P50 million in the same period in 2010 while revenues grew by over 20 percent.

‘China will provide us with good growth. China should continue to contribute in the 5 to 7 percent range in the next year or so. We are seeing revenues increasing by 20 percent and income by as much as 30 to 40 percent,” said Lim.

Lim said SM now has three operating malls in China and, by 2013, it will have seven to eight operating malls with the gross floor area doubling.

SM Prime is opening its fourth China mall in Sozhou in the third quarter of the year, SM Chongquing in 2012 and SM Zibo in 2013, which will add a combined 330,000 square meters (sq m) of gross floor area. By end 2013, SM will open the Tianjin mall and it already has signed up anchor tenants.

“If you look beyond 2013, contribution will be more than 7 or 10 percent. China is a place that we just have to be patient initially. Our strategy of investing there is for the long haul,” Lim said.

Lim said SM Prime is “looking into possibly of spinning off our China development by the end 2013 or 2014 if we have a critical mass for us to raise capital and move further in expanding China,’ Lim said.