Property developer SM Prime Holdings Inc. said Friday it will maintain its 2020 capital expenditures at P80 billion despite recording lower first-quarter net income given the disruption caused by the novel coronavirus pandemic.
SM Prime said in a disclosure to the stock exchange it would continue to focus on projects that would deliver sustainable returns in the long term. It will also continue to explore opportunistic acquisitions and/or investments.
“We believe that in crisis like this, flight to quality will be the driver for consumers and buyers, and SM has the solution and right product,” said SM Prime chairman Henry Sy Jr.
SM Prime booked a net income of P8.3 billion in the first quarter, down 5 percent from P8.8 billion in the same period last year as consolidated revenues declined 3 percent to P25.8 billion from P26.5 billion.
“The company’s first-quarter results reflect the business disruption impact of the quarantine measures implemented last March 16 which affected primarily our leasing businesses,” SM Prime president Jeffrey Lim said.
“The residential segment has still shown strong growth in the first three months, abating the effect of revenue losses in the malls segment. The balance between our recurring and developmental income streams sustains our healthy financial position during this pandemic,” Lim said.
SM Prime closed down its shopping malls, except for stores that offer essential products and services, during the implementation of the enhanced community quarantine in the country.
It also waived P8.8 billion in mall rent from March 16 to May 15.
The company said that as a result, malls revenues declined by 16 percent to P11.3 billion in the first three months.
China mall business, which reported closure on Jan. 25 because of the spread of COVID-19 in the region, now has all seven malls running at 80-percent capacity, with foot traffic gradually going back to normal since its gradual reopening from Feb. 10 to March 11 when lockdowns in China were being lifted.
SM Prime said residential business which accounts for 44 percent of the company’s consolidated revenues recorded a 23-percent increase in revenue in the first quarter to P11.4 billion from P9.3 billion in the same period last year.
SM Development Corp.’s reservation sales in the first quarter amounted to P24.8 billion. With available inventory of 16,000 units equivalent to 12 months of sales, SM Prime has enough supply to cushion the effect of construction delays in the residential projects due to the ECQ.
SM Prime’s other business segments reported consolidated revenue of P2.2 billion in the first three months. Operating income of these businesses declined by 9 percent to P1.1 billion.
The company’s office business segment continued to operate during the ECQ with 90 percent of its tenants being business process outsourcing offices which were allowed by the Inter-Agency Task Force to conduct business.
SM Prime hotels reported the closure of Taal Vista Hotel in Tagaytay City on Jan. 15 to 28 due to period of intense unrest of Taal Volcano. The company’s hotels remain operational during ECQ, with some catering to BPO employees and returning overseas Filipino workers who were affected by the community quarantine measures.
DM Prime said despite the limited revenues, it has sufficient cash flow to support necessary operating expenses.