SM Prime plans up to P100 billion 2027 capex as mall projects take priority

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SM Prime 2027 capex plans

Highlights

SM Prime targets 2027 capital expenditures of P80 billion to P100 billion, maintaining similar levels to this year, with mall projects as the main priority.
Third-quarter 2026 consolidated net income slipped 14.8% to P10.9 billion and revenue declined 11.3% to P31.4 billion as residential weakness pressured earnings.
Rental income for the first nine months of 2026 rose 8.2% to P66 billion, but real estate sales dropped 23.1% to P24 billion, highlighting dependence on recurring mall income.

2027 spending plan centers on malls

As reported by BusinessWorld Online, SM Prime President Jeffrey C. Lim said at a media briefing on Monday that the listed property developer expects 2027 capital spending to be roughly in line with this year, around P60 billion, or in the P80 billion to P100 billion range.

Lim said the company remains confident in the long-term prospects of its portfolio but will be more selective in choosing which projects to advance next year. He said priority will go to completing ongoing mall developments and redevelopments, while several projects remain in the pipeline.

SM Prime's capital expenditures in the first nine months of 2026 fell 25.1% to P44.4 billion from P59.3 billion a year earlier. The company said most of that spending went to ongoing mall and residential developments, with the rest allocated to commercial, integrated, hotel and convention center projects.

Residential weakness weighs on earnings mix

The spending outlook comes as weaker residential demand and economic uncertainty pressure the group's earnings, even as its commercial and hospitality businesses continue to provide support. Higher borrowing costs, elevated inflation and cautious consumer spending continue to weigh on home buying, according to Lim.

SM Prime's third-quarter consolidated net income declined 14.8% to P10.9 billion from P12.8 billion a year earlier, while consolidated revenue fell 11.3% to P31.4 billion from P35.4 billion. Malls contributed P21.9 billion in third-quarter revenue, residential developments added P5 billion, offices and warehouses generated P2.7 billion, and hotels and convention centers brought in P2 billion.

For the first nine months of 2026, consolidated net income slipped 4.8% to P35.4 billion from P37.2 billion, while revenue edged down 0.3% to P103.1 billion from P103.4 billion. Rental income rose 8.2% to P66 billion, but real estate sales dropped 23.1% to P24 billion as weaker sales offset gains from recurring businesses.

Malls remained the largest revenue contributor, accounting for 62% of consolidated revenue, or P63.7 billion, up 10% from a year earlier. Residential revenue fell 21% to P25.6 billion, reflecting slower revenue recognition and buyer backouts, while offices and warehouses rose 10% to P7.8 billion and the hospitality and MICE segment increased 7% to P6.4 billion on stronger hotel bookings and event demand.

At the local bourse on Monday, SM Prime shares fell 64 centavos, or 3.6%, to close at P17.16 each.

In our earlier report on the Philippine stock market rebound despite a record-low peso, we noted that the PSEi bounced back on bargain hunting after recent losses, even as currency weakness kept sentiment cautious. The piece also highlighted the return of net foreign buying and sector moves led by gains in property shares, with investors watching macro conditions and peso fluctuations closely.

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