In a span of three decades, SM Prime Holdings (PSE: SMPH) has become a dominant force in the Philippine real estate sector, powered by the iconic SM Malls and SM Development Corp.’s market-leading developments. (SMDC).
SMPH traces its origins to a small shoe store founded by Henry Sy, Sr. in downtown Manila and has grown into one of the country’s most valuable companies and a leading integrated real estate developer in Southeast Asia.
In addition to its impressive scale, SM Prime serves as a benchmark for the Philippines; its development follows the same line as the country’s economic and social progress.
Converting headwinds into progress
In the 1990s, the Philippines recorded an average real GDP growth of 2.8% per year, due to political instability, natural disasters and the Asian financial crisis.
During the same period, the average interest rate on loans was more than 19%reflecting the broader economic challenges facing the country.
Against this backdrop, SM Group established and listed SMPH in July 1994 to organize and expand its chain of shopping centers. At the time, it had only four in its portfolio: SM North EDSA, SM City Sta. Mesa, SM Megamall and SM City Cebu.
After raising almost 6 billion euros From the capital market, SM Prime aggressively expanded its retail network, strengthening its position as the country’s largest mall operator and securing a spot in the Philippine Stock Exchange Index (PSEi). since October 1994.
Reorganize for growth
SM Prime entered its second decade as a publicly traded company and led a transformative consolidation that changed the course of its growth trajectory.
Through a series of well-executed transactions, SM Group united its extensive real estate holdings under SM Prime, effectively turning the mall operator into a real estate conglomerate.
The entire process, from announcement to final regulatory approval, took time less than five months. His speed and ingenuity gave SM Prime the “Most innovative deal” award from the financial publication Alpha Southeast Asia.
After the consolidation, SMPH’s market capitalization increased by 133% to P950 billion by the end of 2023, compared to about P408 billion in 2013.
Set records
Since its reorganization, SM Prime has consistently pushed the boundaries in value generation.
In 2017, the real estate titan made history as the first company on the PSE to reach a market capitalization of P1 trillion and closed on P1.01 trillion as of June 9.
SM Prime has also crossed major milestones in revenue recognition, crossing the P104 billion mark in 2018 and posting a record P128 billion in 2023, the highest to date.
Over the past decade, annual net income has increased 146%, from P16 billion to a record high of P40 billion in 2023, the highest among listed peers.
The company is poised to break another profit record in 2024, with first-half profits set to rise 13% to P22 billion from P19 billion a year earlier.
Beyond profitability
SM Prime’s growth exceeds financial metrics and shareholder returns. It has been a catalyst for national progress: creating jobs, contributing tax revenues, building communities and promoting sustainable urbanization in the Philippines.
“As SM Prime celebrates its 30th anniversary, our focus remains on innovation and sustainability. With the strong foundation we have built, we believe our best projects are yet to come,” said SM Prime President Jeffrey Lim.
We have integrated project developments into our five-year pipeline, which we expect will propel the company to new levels of growth,” he added.
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