Gentlemen:
This refers to the news articles entitled “SMDC expects ‘18 reservation to grow by 25%” posted in manilastandard.net on April 29, 2018 and “SM turns shy on China, aggressive on massive Manila Bay project” posted in Inquirer.net today. The articles reported in part that: 1. “SMDC expects ‘18 reservation to grow by 25%” posted in manilastandard.net on April 29, 2018, which reported in part that: “SM Development Corp., the residential unit of SM Prime Holdings Inc., plans to increase reservation sales by 25 percent this year from P57.8 billion in 2017 on strong demand, SM Development executive vice president Jose Mari Banzon said over the weekend. Banzon said the residential developer planned to launch over 15,000 residential units this year, with the company experiencing strong sales both from the domestic and international buyers. SM Prime president Jeffrey Lim last week reported that Chinese buyers accounted for almost 30 percent of SMDC’s reservation sales in the first quarter of 2018. Lim said the company was also looking to post a ‘mid teens’ growth in net income in the first quarter of 2018 on strong residential sales and higher mall revenues. Banzon, meanwhile, said the company was poised to launch the next three residential towers, in Chengdu, China, around August this year. The three are part of the company’s seven-tower residential project in Chengdu. . . . . Because of positive response on the group’s residential project in China, Banzon said the company was in search of three additional sites in China for possible expansion. ‘We are looking to two to three sites within the Fujian province for residential development,’ Banzon said. . . . .“
2. “SM turns shy on China, aggressive on massive Manila Bay project” posted in Inquirer.net on April 30, 2018, which reported in part that: “Property giant SM Prime Holdings Inc. has proposed to double its Manila Bay reclamation project spanning the coastal areas of Pasay and Paranaque to 1,200 hectares, potentially creating a new urban hub bigger than Mandaluyong that will require greater capital outlays of around P150 billion. In a chance interview with Inquirer last week, SM Prime chair Henry Sy Jr. said the property company had submitted proposals to reclaim 600 hectares more on top of the initial 600-hectare reclamation projects proposed five years ago. ‘I’m trying to get another 600 hectares,’ Sy said, noting that with a fresh landbank of 1,200 hectares, coupled with the proposed reduction in corporate income taxes and a ‘proper’ airport, the metropolis could be transformed into the ‘next Singapore or Hong Kong. SM Prime is now awaiting the green light to proceed with an initial 300-hectare reclamation project already cleared by Pasay. Sy is hopeful that the initial 300-hectare reclamation project on the Paranaque side could start after a year. Before the government required that the reclamation project pass through the National Economic Development Authority (Neda)/Investment Coordination Committee screening under the public-private partnership (PPP) framework, the Pasay project has already made it to advanced stages. Paranaque has approved the project as well but more procedures beyond the LGU need to be hurdled. . . . . |
The two reclamation projects will require capital outlays of around P150 billion, which could be undertaken over a five-year period, Sy said. It was previously estimated that the two initial projects with Pasay and Paranaque would cost around P54 billion each. ‘We’re anticipating we’re using a lot of capex (capital expenditure) in the reclamation,’ Sy said, adding this was also part of the reason why SM Prime was slowing down on its expansion in mainland China. The group had planned to build one new mall in China every year. Opportunities are seen to be robust in the Philippines, where demand for real estate is so strong that it’s a challenge, even for the country’s largest property firm, to keep on replenishing its landbank. The acquisition of the 20-hectare Ashmore lot along Manila Bay, Sy said, would meanwhile help sustain the company growth. Sy said the bay area would overshadow even BGC. The project will be the single biggest property development project in Metro Manila in recent history. . . . .”
We confirm the veracity of the above-quoted news articles, except with respect to the 20-hectare Ashmore lot which is still subject for further negotiation.
Very truly yours,
TERESA CECILIA H. REYES Vice President – Finance |