SM Prime CFO Jeffrey Lim (left) and CEO Hans Sy. Photo by Krista Angela M. Montealegre

MANILA – SM Prime Holdings Inc is spending $3.4 billion in the next two years to accelerate the expansion of the property businesses of owner Henry Sy and family.

In a disclosure to the Philippine Stock Exchange on Friday, SM Prime said the company will shell out $1.5 billion next year and increase this to $1.9 billion in 2015.

“We plan to fund our $3.4 billion capex requirement through an optimal combination of internally generated cash, debt and equity,” SM Prime said.

SM is in the final phase of consolidating the property companies and assets of the Sy family under publicly listed SM Prime, thereby creating Asia’s biggest real estate firm with a market capitalization of $12.4 billion.

Jeffrey Lim, SM Prime chief financial officer, on Thursday said the full integration of the property units will be completed in the next six months.

SM Land has completed its exchange offer for shares in SM Development Corp and Highlands Prime Inc, which have been delisted in the stock market early this week. Likewise, the Securities and Exchange Commission (SEC) has cleared the merger of SM Land and SM Prime with the latter as the surviving entity, and the injection of the SM group’s real estate assets and shares in property companies into the mall developer.

SM Prime is now the holding firm for the malls, residential, commercial, hotels and conventions, and leisure businesses.

Corazon Guidote, SM Investments Corp senior vice president for investor relations, said SM Prime will spend P23 billion next year for its mall operations in the Philippines. The company will open new malls in Cauayan, Isabela and Angono, Rizal, while expanding its shopping centers in Bacolod and Lipa.

The new projects will add nearly 300,000 square meters of gross floor area to the company’s existing portfolio when they open in the second half of 2014.

By the end of next year, SM Prime will have a network of 50 malls in the Philippines with a gross floor area of 6.6 million square meters.

SM Prime will also beef up its presence in China with the launch of a new mall in Zibo within Shandong province next year. It will have a total GFA of 154,000 square meters.

In China, SM Prime has five shopping centers in the cities of Xiamen, Jinjiang, Chengdu, Suzhou and Chongqing with a total gross floor area of around 0.8 million square meters.

“SM China has become very profitable especially for the mature malls and these are contributing net income of P588 million [in the first nine months of the year] and this increased by 21.5 percent [year-on-year]. You can see the growth has been very strong and there’s new capacity that’s in gestation so you can expect more growth from China,” Guidote said.

SM Prime’s mall operations booked a net income of P8.43 billion in the nine-month period ending September, up 14 percent from P7.40 billion in the same period last year.

SM Prime will end the year with 48 malls in the Philippines and five in China with a combined gross floor area of 7 million square meters with the launch of SM City BF in Paranaque and the expanded SM Megamall, set to become the largest mall in the Philippines upon completion.