May 5, 2014

SM Prime Holdings, Inc. (SM Prime), one of the leading integrated property development companies in Southeast Asia, reported an 11 percent hike in consolidated net income to P4.58 billion for the first quarter of 2014 from P4.11 billion in the same period last year.

In a disclosure to the Philippine Stock Exchange, the firm said its consolidated revenues rose 3 percent to P15.35 billion from P14.95 billion, year-on-year.

Meanwhile, SM Prime’s board of directors approved the issuance of Fixed Rate Peso Retail Bonds up to P25 billion. The bonds will be offered with tenors of 5 years and 6 months, 7 and/or 10 years.

The proceeds of the bonds will be used to finance capital expenditures for the expansion of the company’s malls, offices and hotel operations.

The board also authorized the management to negotiate and finalize the terms and conditions, including pricing, tenor and any increase in issuance amount, and execute any and all documents necessary, to implement the retail bond issue.

“We are off to a good start this year maintaining a steady growth for the first quarter of 2014. As we move towards our 5-year roadmap, we are very optimistic that SM Prime will achieve its targets,” said SM Prime president Hans T. Sy.

Rental revenues accounted for 56 percent of the consolidated revenues, and grew by 12 percent to P8.56 billion in 2014 from P7.63 billion same period in 2013.

The increase in rental revenue was primarily due to the new malls opened in 2012 and 2013, namely, SM City Olongapo, SM City Consolacion, SM City San Fernando, SM City General Santos, SM Lanang Premier, SM Aura Premier and SM City BF Parañaque, with a total gross floor area of 818,000 square meters.

Excluding the new malls and expansions, same-store rental growth is at 7 percent.

Real estate sales recorded a 17 percent decrease to P5.02 billion in 2014 from P6.01 billion in 2013 primarily due to sales take up attributable to only two project launches in 2012 of about 4,600 units from Breeze and Grace Residences compared to the nine project launches in 2010 and 2011 of about 26,700 units mainly from Jazz, Light, Wind, Shell and Green Residences.

On the average, it takes about two years before revenues are recognized due to the percentage of completion accounting.

Cinema ticket sales significantly increased by 40 percent to P1.06 billion in 2014 from P0.76 billion in 2013 due to the opening of digital cinemas at the new malls and the showing of local blockbuster movies with 100 percent sales growth  year-on-year.