PROPERTY developer SM Prime Holdings Inc. on Monday reported an all-time high net income of P24.5 billion for the first half of the year, up 11 percent from P22.1 billion last year, on account of higher rental income, real estate sales and ancillary revenues.
Jeffrey Lim, SM Prime president, said at the company’s earnings briefing that easing inflation combined with the recent wage adjustment “will support household consumption moving forward.”
Lim said the low inflation environment can also encourage spending on other sectors of the economy that will also benefit the company’s enterprises like its residential business.
The company reported that revenues grew 5 percent, at P68 billion from P64.7 billion.
“Rental income from malls, offices, hospitality and MICE (meetings, incentives, conferences and exhibitions) contributed 60 percent of the total. Real estate sales made up 29 percent, while the remaining 11 percent came from cinema ticket sales, food and beverage, amusement and related offerings,” the company said.
Malls accounted for the largest share of earnings at 69 percent, contributing P17 billion — boosted by new openings, higher foot traffic and strong occupancy, the company said.
“The redevelopment and new attractions at our flagship Mall of Asia drove strong foot traffic and tenant sales. Robust consumer activity and improving business confidence also lifted contributions across our portfolio,” said Lim.
Income from the residential projects meanwhile grew 2 percent to P5.1 billion from P5.0 billion, supported by revenue from completed units and prior-year sales. The segment accounted for 21 percent of total earnings.
The office and warehouse segment contributed 7 percent, with earnings increasing 9 percent from P1.6 billion to P1.7 billion owing to improved warehouse occupancy.
Hotels and convention centers accounted for 3 percent of total income after contributing P635 million, up 20 percent from P527 million.
“The increase was driven by strong room bookings and a busy MICE calendar,” SM Prime said.
Lim said the company is on track to spend P100 billion to expand its businesses, with P37.3 billion disbursed in the first semester.
Of the amount, P21 billion is allocated to expand the company’s malls portfolio, adding 205,400 square meters (sq.m.) in gross floor area (GFA) while redeveloping 124,488 sq.m. of existing mall space.
Another P67 billion investment is planned for the residential business to put up regional, premium and leisure developments; and large, mixed-use, master-planned urban centers in Luzon and Visayas.
The remaining P12 billion is allocated for the office, hospitality and MICE businesses to expand capacity and enhance facilities.
This will include the construction of two new convention facilities, the renovation of hotel rooms and the addition of food and beverage outlets in existing hotels.
“Our results underscore the resilience of our businesses and the strength of our diversified portfolio. With our capex program progressing as planned, we are well-positioned to drive long-term growth across key markets,” said Lim.
