Billionaire Sy's SM Development Adds Housing Projects; Shares Reach Record
“Our sales velocity has been very steady and encouraging,” SM Development Vice President Jose Gabionza said in a phone interview today in Manila. “Accelerating and increasing our new projects this year is not a farfetched idea.”
Manila-based SM Development said in April that it plans to market four new residential projects this year that will cost 1 billion pesos ($22 million) to 2 billion pesos each to build. The company started five projects last year, marketing four in November, according to its 2009 annual report.
The Philippine economy grew 7.3 percent in the first quarter, the fastest pace in three years, driven by a recovery in exports and rising funds sent home by overseas Filipinos. Remittances from Filipinos working and living abroad account for at least a 10th of the economy and help pay for purchases of homes and cars.
SM Development last month sold 10 billion pesos of bonds in a private placement, raising funds it intends to use to expand its 150 hectares (371 acres) of land. Some of that land is near the properties of SM Prime Holdings Inc., the nation’s largest shopping mall operator and also controlled by Sy.
“The bonds will help accelerate growth,” Gabionza said. “At the rate we are building, we’d use up our landbank in three to five years.”
SM Development shares jumped 6.1 percent to 7 pesos in Manila, the highest close based on Bloomberg data going back to March 1992. The benchmark Philippine Stock Exchange Index rose 2 percent.
“The company is quickly becoming a major player,” said Phillip Hagedorn, who helps manage about $150 million at ATR KimEng Asset Management Inc. “Their strategy of developing residential properties near their entertainment and shopping complexes is very appealing.”