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MANILA, Philippines – Despite tensions between Manila and Beijing over Panatag Shoal, the Philippines’ biggest mall developer is pushing ahead with the acquisition of more land in China.
"We're negotiating with five locations within those areas where we are," Jeffrey Lim, SM Prime Holdings Inc. chief financial officer, said on the sidelines of a Philippine Stock Exchange forum on Thursday.
SM Prime has four malls in China located in the cities of Xiamen and Jinjiang in Southern China, Chengdu in Central China, and Suzhou in Eastern China. The company will open its mall in Chongqing within the year, followed by its expansion in Zibo and Tianjin.
The mall developer is building up its China operations in line with its $500-million planned public offering of its overseas project, either through a real estate investment trust or through listing at the Hong Kong or Singapore bourses by 2013.
Lim said tensions between the Philippine and Chinese governments have yet to affect SM Prime’s financial performance.
"We should be able to sustain driven by the growth in the Philippine economy. You have the PPP projects coming in, tourism will continue to increase in terms of arrivals, and growth in OFW remittances will be sustained," said Lim.
The Aquino administration is ramping up the country’s infrastructure through its Public-Private Partnership Program.
SM Prime’s consolidated net income increased 15 percent to P2.43 billion in the first quarter of this year from P2.12 billion in 2011 as a result of store expansion and rising momentum of its China operations.
The company plans to draw down from a P7-billion corporate notes facility in the second week of June.
The rates of the notes – which have tenors of five, seven and 10 years - have yet to be finalized, but "we can program it in such a way that we'll close it one at a time,” said Lim.
SM Prime tapped First Metro Investments Corp. as the underwriter of the notes issuance. It was given the mandate to issue P5 billion worth of corporate notes, which can be upsized to P7 billion. The proceeds of the debt-raising activity would be used to finance SM Prime’s expansion.
"If we need more funding in the second half, I think the option for us will be more of retail [bonds] rather than a corporate notes issuance," Lim said.
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