SM Prime to issue P20b worth of fixed retail bonds

SM Prime Holdings Inc., the country’s largest integrated real estate company, said Friday it plans to issue up to P20 billion worth of fixed rate retail bonds before the end of the year to finance capital expenditures in 2016.

SM Prime said in a disclosure to the stock exchange its board approved the issuance of up to P15 billion in bonds with an oversubscription option of up to P5 billion and with maturities of 5.25 years and 10 years.

“The board of directors 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,” SM Prime said.

SM Prime vice president for finance Teresa Cecilia Reyes said in a text message the company planned to issue to bonds in December.

“The bonds will finance capital expenditures up to 2016,” Reyes said.

SM Prime in August said it planned to raise P30 billion in fresh capital over the next 12 months to partially fund its 2015-2016 capital spending program.

SM Prime executive vice president Jeffrey Lim said the P30-billion fund raising program would be done through the issuance of retail bonds in two tranches or through bank borrowings.

SM Prime in 2014 issued P20 billion worth of bonds maturing in 2020, 2021 and 2024.

SM Prime in the first half of the year reported a 90-percent increase in first-half net income to P18.7 million from P9.8 billion year-on-year, boosted by a one-time extraordinary gain from the sale of marketable securities.

Excluding the one–time trading gain, the company’s recurring income grew 15 percent year-on-year to P11.2 billion.

First half consolidated revenues rose eight percent to P35.9 billion from P33.3 billion on year, mainly driven by the growth in rental revenues as well as higher recognition on completed projects of its real estate business.

SM Prime is set to open this year SM Center Sangandaan in Caloocan, and two malls outside Metro Manila,, namely SM City Cabanatuan in Nueva Ecija and SM Seaside City Cebu.

The company is expanding two existing malls--SM City Lipa in Batangas and SM City Iloilo. The new and expanded malls will have a a combined floor area of almost 716,000 square meters.

SM Prime by the end of 2015 will have 55 malls in the Philippines and six in China with an estimated combined floor area of 8.3 million square meters.

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