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Rent Is the Engine, Refinancing Is the Weather: Reading SM Prime’s 9M 2025


In a year when higher funding costs and mixed consumer signals have turned developers cautious, SM Prime Holdings (SMPH) just delivered a set of numbers that feel both familiar and instructive: steady rent‑led growth, softness in residential, and a heavier–but manageable—refinancing calendar.

On the headline figures, consolidated revenues rose 4% to ₱103.40B for the first nine months of 2025, carried by rent (up 7% to ₱60.99B), while real estate sales eased 2% to ₱31.20B. Costs and expenses fell 1%, pushing operating income up 9% to ₱51.90B and net income (attributable) up 10% to ₱37.24B. EPS clocked in at ₱1.291, with a cash dividend of ₱0.480 already paid in May.

The Core Story: Malls Still Do the Heavy Lifting

SMPH’s malls continue to anchor earnings strength. In the nine months, Malls posted ₱60.92B in revenue and ₱31.51B in pre‑tax profit; Residential contributed ₱32.58B and ₱10.41B, respectively; Hotels & Conventions added ₱6.01B and ₱1.01B; Commercial & Integrated Developments generated ₱3.89B and ₱3.01B. Operating leverage is visible: the company squeezed more profit out of largely flat third‑quarter revenues thanks to disciplined costs.

This operating resilience rests on footprint and execution. SMPH opened SM City Laoag in May and SM City La Union in October, bringing the Philippine mall count to 89 (plus 8 in China). The pipeline of redevelopments also supports rent and occupancy, while hotels, offices, and conventions continue to offer steady—if smaller—contributions.

Where the Fuel Mix Shows Some Octane Lag

The Residential engine sputtered a bit: real estate sales slipped 2% year‑on‑year and segment profit ticked lower. Receivables and contract assets rose (₱107.25B), with unbilled revenue tied to construction milestones also higher—fine if build schedules and collections remain tight, more delicate if they don’t. Meanwhile, non‑cash OCI headwinds—FVOCI losses in the equity book and a weaker cash‑flow hedge reserve—trimmed total comprehensive income to ₱35.67B (from ₱37.21B), even as net income advanced.

These are not structural breaks; they are friction points that investors should watch: project take‑up and construction cadence, pricing power, and the sensitivity of SMPH’s OCI to market marks.

Balance Sheet: Bigger Tank, Higher Octane Price

On the funding side, interest‑bearing debt climbed to ₱419.82B (+8% YTD), while current maturities rose to ₱112.08B. SMPH notes these are “due for refinancing,” a normal course for a developer of this scale. Coverage remains sound: interest coverage at 7.06×, debt/EBITDA at 4.84×, and net debt‑to‑equity at 46:54. Liquidity is adequate, with a current ratio of 2.28× and acid‑test 1.29× (excluding items flagged for refinancing).

Hedging helps: after swaps, roughly 57% of long‑term borrowings are effectively fixed‑rate. Still, derivative assets came down with maturities and fair‑value changes—less cushion than last year, but consistent with a company rolling hedges as the book evolves.

The Bottomline

SMPH’s playbook still works: rent growth and operating discipline carry the income statement; capex and landbanking expand the footprint; hedges and market access keep the funding bridge sturdy. The residential wobble and OCI marks are the ballast on comprehensive profits, not the anchor. The refinancing calendar is heavier, but coverage and liquidity suggest it’s navigable—especially for a name that just placed ₱25B in retail bonds and continues to roll projects and tenants into an already dominant network.

As with any property stock in a higher‑for‑longer world, the cost of money is the weather: if it worsens abruptly, sentiment and valuation can swing faster than the EPS math. But in the base case, SMPH’s rent engine remains powerful enough to keep the vehicle moving—just perhaps with a touch more fuel discipline and a keener eye on the road ahead.

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