real estate industry

SM to invest up to P90B for expansion, eyes more regional development

Lance Spencer Yu

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SM to invest up to P90B for expansion, eyes more regional development
SM Investments cites rising employment, OFW remittances, and BPO revenues as its reasons for optimistic growth prospects

MANILA, Philippines – SM Investments Corporation (SMIC) is allocating P80 billion to P90 billion in capital expenditure to fuel its expansion of malls, residential developments, and retail stores.

SM Prime Holdings (SMPH), the Sy-led conglomerate’s property arm, intends to open at least three new malls in 2023. Last year, SM Prime added four new malls to its portfolio – SM City Roxas in Capiz, SM City Tanza in Cavite, SM City Sorsogon in Bicol, and SM City Tuguegarao in Cagayan.

By the end of last year, there were 82 SM malls in the Philippines, with 58 in the provinces and 24 in Metro Manila. Of these, 30 to 35 were deemed “fully mature.”

SM Prime also announced its ambition to push through with a real estate investment trust (REIT) listing within 2023.

“We have started the process of incorporating the REIT company, and we are now in discussions with advisors. Hopefully we can launch the REIT by the second half of the year,” SM Prime president Jeffrey Lim said in a press conference.

The REIT will initially include 12 to 15 mature malls, although officials said more could be transferred for future growth.

The proceeds from the listing, which could reach $1 billion, will be used “to fund SMPH’s expansion plans, including the reclamation project in Pasay City,” according to a stock market disclosure filed by SM Prime.

SM is also expanding its residential development, with plans to launch 15,000 to 20,000 residential units in 2023. SM Prime currently has 84 residential projects.

SM Retail is also set to add about 400 stores to its network this year, focusing on food retail and specialty retail stores.

Besides these expansions in their core investments, SMIC is also dabbling in renewable energy.

Last year, SMIC acquired a 100% stake in the Philippine Geothermal Production Company, which manages the Tiwi and Mak-ban geothermal plants.

The conglomerate now intends to explore other areas for renewable energy production, hoping to double capacity from 300 megawatts to 600 megawatts over the coming years.

“Opportunities for growth in the Philippines remain high. Heading into 2023, we remain optimistic as a group. The majority of our expansion is focused on the regions especially in emerging regional centers outside of Metro Manila. Our businesses are well-positioned and have clear strategies to participate in the country’s strong growth,” SMIC president Frederic DyBuncio said during the company’s annual stockholders’ meeting on Wednesday, April 26.

SMIC cited rising employment, overseas Filipino workers (OFW) remittances, and business process outsourcing (BPO) revenues as its reasons for optimistic growth prospects. It noted that the amount of BPO revenues generated, estimated at nearly $30 billion annually, is already at par with OFW remittances.

SMIC’s core investments are in SM Prime Holdings, SM Markets, WalterMart, Alfamart, The SM Store, BDO Unionbank, and China Bank.

It also has equity investments in Belle Corp., Atlas Mining, CityMall, 2GO Group, MyTown, GrabPay, Goldilocks, AirSpeed, among others. –

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Lance Spencer Yu

Lance Spencer Yu is a multimedia reporter who covers the transportation, tourism, infrastructure, finance, agriculture, and corporate sectors, as well as macroeconomic issues.