Mall developer SM Prime, the listed vehicle of Filipino billionaire Henry Sy has already dipped into at least $50-$100 million of a recent bond sale to help bring to market its 530,000 square metre SM Tianjin Shopping Centre project in China.
The Philippines-based developer completed the $350 million bond sale late last month after shelving an earlier plan for an IPO of its China retail assets. Now with the additional financing in hand, SM Prime appears to be pushing forward with its megamall in northern China, as well as plans for a chain of mainland shopping centres, which it could later list on the stock market.
Speaking to the local press in Manila, SM Prime Holdings Inc chief financial officer Jeffrey Lim last week said the company has withdrawn $50-$100 million from the newly-raised debt facility.
More Malls for an Overbuilt Second Tier Market
The company official indicated that the funds will be put toward completing construction on the Tianjin mall, which was originally slated for completion in 2013.
As revealed in a study of 2013 mall construction released by real estate consultancy CBRE earlier this year, Tianjin greeted more than 640,000 square metres of new shopping centre space last year, more than any other city in China, aside from Chengdu. Including the SM project, the second-tier city in northern China already has another 2.5 million square metres of space under construction, according to the survey.
More Debt Financing Coming Before IPO
AFter this latest bond sale, Sy – who is already the Philippines richest man with a personal fortune estimated at $12.5 billion – has more financing plans on the way.
According to a report earlier this month in a Manila newspaper, SM Prime plans to sell as much as 25 billion pesos ($575 million) more in bonds to retail investors during July. The proceeds of debt financing would be used to fund further mall projects in China and the Philippines.
SM Prime Also Building in Yangzhou and Yibo
Already, part of the proceeds of the May bond will be used to start devlopment next year of a new mall in the third-tier city of Yangzhou in eastern China’s Jiangsu province. According to Lim, the Yangzhou project, despite only starting construction in 2015, would be complete in 2016. A similarly optimistic timetable for the Tianjin mall was announced when the project began construction in 2012.
Later this year, SM Prime will open its newest shopping center in the city of Zibo, Shandong. The company already has 5 malls in the cities of Xiamen, Jinjiang, Chengdu, Suzhou and Chongqing
SM Prime plans to open a mall per year in the world’s second biggest economy as the company beefs up its portfolio in preparation for a planned listing of its Chinese assets.