SM Investments Gears up for the uptrend in property

By SM Investments Corporation, 2006-06-20

SM Investments Corporation (SM Investments), is gearing up for the property sector
uptrend as it positions itself on three major fronts: residential and condominium
development, commercial development, and leisure and tourism. SM Investments is
one of the Philippines’ largest conglomerates operating in retail merchandising,
shopping and entertainment malls, financial services, and real estate and tourism.

The holding firm has organized the SM Investments Property Group to set the direction
and implement the conglomerate’s plan and vision to secure leadership across the
three business fronts. The Property Group is headed by SM Investments Vice
Chairman Henry T. Sy, Jr., who will serve as its managing director.

“The organization of the Property Group is part of the company’s strategy to diversify its
businesses and to capitalize on its strength in the mall and retail businesses.� said Mr.
Sy.

“While remaining anchored in the retail and shopping mall businesses, we see a lot of
growth potential in the property sector, which is recovering from the 1997 Asian crisis.
This opportunity is partly an offshoot of our commitment to create value in the areas we
develop, which, in turn, draws the buyers who appreciate convenience, improved quality
of life and value for money. Property development has always been an integral
component of SM, in particular the malls, so it makes sense to expand, to undertake
other types of projects independent of the malls.� he said.

SM Investments is using its land bank to lay the groundwork for various real estate
projects. The conglomerate is targeting key market segments, including the overseas
Filipino workers, the booming business process outsourcing sector, and the rising
number of tourists, both domestic and foreign.

SM Investments plans to take advantage of the growing number of SM shopping malls -
- numbering 25 to date -- which may serve as the anchor for the conglomerate’s other
property ventures. “The value of properties surrounding the malls always increase
whenever we put up a new SM mall so we would like to participate in that,� Mr. Sy said.

This is certainly the case for SM Investment’s direct venture into office and commercial
development. SM Prime Holding’s Mall of Asia, touted as the region’s biggest shopping
and leisure destination, outside of China, serves as the anchor for the conglomerate’s
Central Business Park (CBP) along scenic Manila Bay.

The CBP is a 60-hectare contiguous piece of land in Bay City, Pasay owned by SM
Investments subsidiary Shoemart, Inc. It has been masterplanned and developed by
SM Investments to become one of the prime real estate destinations for retail
operators, commercial and office headquarters, BPOs and financial institutions. It is the
most scenic business district in Metro Manila enjoying the view of Manila Bay and its
spectacular sunset. It is also the closest business district to the Ninoy Aquino
International Airport.

The 386,000-square meter Mall of Asia is the centerpiece of the CBP. It welcomed
close to one million people on its opening day last May 21 and to date continues to
attract droves of shoppers and tourists. The shopping and business complex features
over 600 retail shops and 150 indoor and alfresco dining outlets, an Olympic-sized ice
skating rink, as well as the country’s first IMAX theater.

Adjacent to the Mall of Asia will be the 10-story OneECom Center Complex and the
MAITRADE Expo and Convention Center, both of which broke ground in March. SM
Investments is spending 2.4 billion pesos for the two projects. A sports arena is also in
the pipeline of anchor projects in the CBP for sporting events and entertainment shows.
The OneE-comCenter Complex will consist of four multi-purpose buildings that will cater mostly to technology-based companies engaged in software development and BPO
such as contact centers, animation, and medical transcription.

The four-level MAITRADE will be the country’s largest privately-run exhibition and
convention center. Discussions are underway with third parties to develop hotels
overlooking the bay.

Other developments being planned in the CBP include corporate headquarters for one
or two conglomerates, office and residential clusters, as well as a ferry terminal.
The mall-anchored approach likewise has been tapped for SM Investments’ residential
development projects in SM City Sta. Mesa and the SM City Bicutan. In those ventures,
SM Investments, through its subsidiary SM Development Corporation (SMDC), is
building residential condominiums near the shopping facilities. SMDC is SM
Investment’s construction arm for middle to upscale residential condos and commercial
properties. It aims to tap the land bank of SM Prime’s malls and the other landed
subsidiaries of SM Investments.

At SM Centerpoint, SMDC recently broke ground on Mezza Residences, which has
four, 38-storey residential towers, offering one-bedroom, two-bedroom, three-bedroom,
and suite units suitable for young professionals. At SM City Bicutan, Chateau Elysee’s
first and second clusters, Concorde and Lafayette, are both ready for occupancy, while
construction of the third cluster, Eiffel, is set to begin within this year. SMDC is also
planning a residential subdivision project south of Manila.

Another SM Investments subsidiary, Highlands Prime, Inc., is boosting its line-up of
exclusive out-of-town residential villas. The Tagaytay Highlands is expanding its
offerings, with Woodridge Park, a residential condominium development inspired by the mountain resorts of the US’ Colorado region. It will have a view of the Woodlands, the Tagaytay Highlands Golf Course, Canlubang, Laguna de Bay and surrounding mountains. Meanwhile, construction of the Horizon, Highland’s newest golfers’ haven, will be completed in July.

For its long-term venture into leisure and tourism development, SM Investments is
embarking on the large-scale development of Hamilo Coast, a 5,700-hectare terrain,
comprising 13 coves along the coast of the South China Sea. An two-hour drive away
from Metro Manila with the completion of a highway link, the seaside property in
Nasugbu, Batangas is positioned to become the country’s premier leisure destination.

The conglomerate’s venture into leisure and tourism is aimed at tapping the projected
increase in tourist arrivals in the country, and rides on the government’s strategy to
position the Philippines as one of Asia’s leading tourist destinations.

The Property Group’s development and tourism and other property projects are
expected to become a an equally important contributor to profit growth for SM
Investments in the next few years. Between the CBP project, the Tagaytay Resort
development, the development of Hamilo Coast, and the mall-anchored residential
projects, the prospects for SM Investments’ Property Group are bright, and the
possibilities are endless.

Stock Performance

SMDC

3.75

as of 12:00 09/19/07
3.80
  3.70
 +2.7%

 

Media