SM Prime Q1 profit flat as costs offset rental gains

Insider Spotlight

• Net income steady at P11.66B as costs rise faster than revenues
• Revenues inch up 2 percent to P33.3B, led by rentals and other income
• Real estate sales fall 16 percent amid weaker recognition and cancellations
• Mall segment remains core driver, contributing 61 percent of revenues
• Costs climb 3 percent on higher depreciation and fixed overhead
  
  
  

SM Prime Holdings, Inc. reported first quarter net income of P11.66 billion, largely unchanged from P11.65 billion a year earlier, as rising costs offset modest revenue growth despite resilient recurring income streams.

The topline

Total revenues rose 2 percent year-on-year to P33.3 billion from P32.8 billion, supported by stronger rental income and ancillary revenues that helped cushion a sharp decline in real estate sales.

Rental income, the company’s main earnings anchor, increased 8 percent to P21.6 billion from P20.0 billion on improved occupancy across malls and offices. Other revenues grew 11 percent to P3.9 billion, driven by higher ticket sales, food and beverage income, and experiential offerings.

Jeffrey C. Lim  

CEO, SM Prime

The drag

Real estate sales dropped 16 percent to P7.8 billion from P9.2 billion due to slower revenue recognition from prior-year sales and higher cancellations, weighing on overall topline growth.

This performance was disclosed by the company in a regulatory filing, where management emphasized the continued importance of recurring income streams.

Cost pressure

Costs and expenses climbed 3 percent to P16.6 billion from P16.1 billion, mainly due to higher depreciation and amortization charges as well as fixed overhead costs, limiting bottom-line expansion.

By segment

Malls remained the largest contributor, generating P20.4 billion or 61 percent of total revenues, up 8 percent from P18.9 billion, supported by high occupancy and sustained consumer demand for experiential retail.

The residential segment contributed P8.3 billion, down 14 percent from P9.7 billion, accounting for 25 percent of revenues. Hotels and convention centers posted P2.2 billion, up 8 percent year-on-year, while office revenues rose 10 percent to P2.5 billion on improved occupancy.

What they’re saying

“Recurring income will remain central to our performance in 2026,” said Jeffrey C. Lim, CEO of SM Prime. “We are prioritizing occupancy, customer experience and cost discipline to navigate the challenging operating environment.”

The balance sheet

As of March, SM Prime’s total assets stood at P1.10 trillion, while capital expenditures declined 9 percent to P15.5 billion.

The board approved cash dividends of P0.42 per share, totaling about P12.20 billion, payable in May.  —Princess Daisy C. Ominga | Ed: Corrie S. Narisma