More Mall of Asia-like projects for merged SM units
MANILA, Philippines – The newly merged property units of Henry Sy-led groups will use their different business strands to develop lifestyle developments bigger than their current flagship integrated complex, the Mall of Asia (MOA) in Pasay City.
After folding the mall, residential, office and hotel development business units into SM Prime Holdings to benefit from economies of scale and a stronger asset base, the Sy-led property giant said these combined units will be tapped when building large-scale lifestyle developments.
“[The] goal is to replicate the success of our MOA complex...in other major cities. Malls will continue to be the priority and will be the heart of our lifestyle development,” said SM Prime CFO, Jeffrey Lim at a special stockholders meeting held on Wednesday, July 10.
“This [merger] will allow SM Prime to optimize the existing projects as well as provide the company with greater flexibility to undertake more lifestyle projects similar to our Mall of Asia complex,” he added.
On the sidelines of the special stockholders meeting, Lim said that unit heads of the SM Group's different property firms are scheduled to craft an integrated development plan which will encompass the mall, residential, office, hotels, convention center and tourism segments.
Lim said shopping mall development will remain the core business of the enlarged SM Prime, and will continue to contribute 60% of the group's profit.
Lim said other locations where they could place their new lifestyle developments might be in Cebu and Davao.
According to Lim, following the consolidation, landbank will increase 8 times to 920 hectares and the group will spend P60-billion for this year.
Shareholders of SM Prime Holdings Inc on Wednesday 10 July approved the plan to consolidate the businesses under the shopping mall developer.
The shareholders also approved the doubling of the company's authorized capital stock from P20 billion to P40 billion for the issuance of new shares and the amendment of its primary purpose to become a mixed-use real property developer.
As part of the consolidation, SM Land Inc. is conducting a tender offer to acquire shares in SMDC and Highlands Prime Inc in exchange for shares of SM Prime. After the offer, SM Land will then merge with SM Prime with the latter as the surviving entity. SM Prime will then acquire specific real estate companies and assets of SM Investments Corp in exchange for new shares in the mall developer.
Lim said they aim to complete all necessary approvals and complete this transaction before the end of 2013.
In terms of international expansion, Lim said they will focus on China for now.
“The Philippines will still be our main market. Right now China is only contributing 10% to the bottom line. In our enlarged entity with SMDC and all the other real estate assets coming in that contribution will come down," said Lim.
"We will look to expand by one mall a year over the next two to three years. This year we’re not opening any malls so the average will still be one. SMDC will look into expanding into China. Since we already have the malls there if they can do some residential components then we will look into it,” said Lim.
The Sy-led integrated property created a consolidated group that dislodged Ayala Land Inc as the country's most valuable property croup.
Aside from its core businesses, the SM group also has interests in mining, infrastructure, gaming, and geothermal energy.
Henry Sy Jr., who headed SM Development Corp, will be chairman of the merged entity, while brother Hans, who was president of SM Prime, will continue to hold the same position. Jeffrey Lim will continue as chief finance officer.
“He’s [Henry Sy Jr.] the thinker and I’m the executioner. It’s going to be very much teamwork. We will work together and I will rely on him to think ahead and he will rely on my to execute things properly,” said Hans Sy.