Company Briefing May 203 Positioning SM Prime for the next stage of growth
Disclaimer This Company Presentation (the Presentation ) has been prepared by SM Prime Holdings, Inc. (the Company ) solely for information purposes. The Presentation is not intended to form the basis of, and should not be relied upon to make any investment decision or any decision to purchase or subscribe for securities of the Company. The Presentation does not constitute a prospectus or form part of or contain an advertisement of securities, offer, solicitation or invitation for the sale, subscription or purchase of securities and neither this document nor anything contained herein shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever, nor does it constitute a recommendation regarding the shares of the Company. Any decision to exchange, purchase or subscribe for securities in any offering must be made solely on the basis of information contained in the offering document issued or to be issued in connection with such offering. All the information in the Presentation has been provided by the Company and has not been independently verified. This Presentation includes forward-looking statements, including, without limitation, expectations regarding the Company s future business, financial condition, strategies and prospects. No forward-looking statements contained herein should be relied upon as predictions of future events. No assurance can be given that the expectations expressed in these forward-looking statements will prove to be correct. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company and its subsidiaries to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual results, performance or achievements of the Company and its affiliates to materially differ from those in the forward-looking statements include, but are not limited to, a failure to obtain necessary corporate and regulatory approvals for the transactions described herein, the competitive nature of the markets in which the Company operates, conditions in the Philippines real estate market, and volatility and uncertainty in the Philippines, regional and global financial conditions. These forward-looking statements are based on information available to the Company as of the date hereof. Except to the extent required by law, [the Company] expressly disclaim any obligation or undertaking to release any updates or revisions of the forward-looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. No representation or warranty, express or implied, is or will be made in or in relation to, and no responsibility or liability is or will be accepted by the Company or any of its shareholders, subsidiaries or affiliates, or by any of their respective directors, officers, partners, employees, agents, representatives, advisers or legal advisers as to the accuracy or completeness of the Presentation, and any liability therefore (including liability for any direct or indirect consequential loss or damage) is hereby expressly disclaimed. There is no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This Presentation includes unaudited pro forma condensed consolidated financial information for SM Prime and its subsidiaries as of December 3, 202, and for the three years ended December 3, 200, 20 and 202, as if the reorganization had occurred as of January of each of the periods presented, or December 3, 202, as the case may be. The pro forma financial information included herein is necessarily based on certain assumptions, and such information is not necessarily indicative of the operating results or financial position that would have been achieved had the transactions described herein been completed prior to such periods, nor is it indicative of future results of operations or financial position, and should not be relied upon as being so indicative. The Presentation is not an offer of securities for sale into the United States, Canada, Australia, Japan or in any other jurisdiction. The Company has not registered and does not intend to register any shares, or other securities representing shares, in the United States or to conduct a public offering of any securities in the United States. The Company s shares, or other securities representing shares, may not be offered or sold in the United States except pursuant to an exemption from, or transaction not subject to, the registration requirements of the US Securities Act of 933 (the Securities Act ). Securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. In the United States, the exchange offer described in this Presentation (the Exchange Offer ) is being made in reliance upon the Tier I exemption pursuant to Rule 4d-(c) of the U.S. Securities Exchange Act of 934 and the offer of shares in the Company in connection with the Exchange Offer will be exempt from registration under the Securities Act pursuant to Rule 802 thereunder. The Exchange Offer and the distribution of this Presentation and other information in connection with the Exchange Offer may be restricted by law in certain jurisdictions. SM Land Inc. and the Company and their affiliates assume no responsibility in the event there is a violation by any person of such restrictions. Persons into whose possession this Presentation or such other information should come are required to inform themselves about and to observe any such restrictions. The Presentation is intended only for persons which are lawfully able to view it under the laws of the jurisdictions in which they are located or other applicable laws, and by viewing the Presentation, you represent and warrant that you are lawfully able to view it under the laws of the jurisdiction in which it you are located or other applicable laws.
Retail 958-984 Malls 985-2002 Diversified 2003-Today The SM Group is poised to embark on its next phase of growth 2006 202 2003 958 SM was founded as a humble shoe store by Henry Sy Sr. in downtown Manila 972 Expanded shoe store into a full-line Shoemart department store 985 Opened first SM shopping mall SM City North EDSA, which was envisioned to be a self-contained city within a city 994 Listing of SM Prime with an initial portfolio of 4 shopping malls SMDC launched maiden residential project Opened SM Mall of Asia ( MOA ) on 60-ha of reclaimed land Opened an SMX convention center, two E-Com office buildings, and SM Arena within the MOA complex Launched the Hamilo Coast project, a large scale tourism/resort community development in Batangas 3
To enable this, SM Group is embarking on a highly transformational transaction for its real estate businesses 3,4 Residential 2 Hospitality & Leisure Commercial Hospitality & Leisure Malls ASSETS 3,4 Commercial, Hospitality & Leisure 3 SMIC s Real Estate Assets 5 Hospitality & Leisure ¹ Tender offer; ² Merger; ³ Share for share swap; 4 Asset for share swap; 5 Includes Prime Metroestate Inc. and Tagaytay Resort and Development Corporation among others. 4
Transaction will create an integrated real estate platform Tourism Lifestyle Cities Resorts Malls Commercial Residential Opportunity to optimize existing projects and landbank Greater flexibility to undertake large scale mixed-use developments Enhanced ability to take advantage of attractive growth opportunities across real estate asset classes Greater coordination across business units Further strengthen balance sheet for accelerated growth 5
Proposed transaction Current Proposed structure Sy Family / Other SM Group Sy Family / Other SM Group 36.% 63.9% SM Land New 65.2% 4.0% Including SM Land assets 20.9% 2.7% 00.0% 3 54.9% 5.0% 20.2% 00.0% 3 00.0% Unlisted real estate companies and assets 2 Unlisted real estate companies and assets 2, 4 Listed Unlisted Privatised Undertaking to tender Includes 35.8% stake in Highlands Prime Inc. held by Belle Corp; 2 Companies - Prime Metroestate Inc., Tagaytay Resort & Development Corporation, SM Hotels and Conventions Corporation, SM Arena Complex Corporation, Costa Del Hamilo Inc.; Assets - MOA Arena, Radisson Cebu Hotel, Tagaytay lot, among others; 3 Assuming full acceptance rate of the tender offers; 4 Includes SMIC s indirect shareholding in Prime Metro Estate Inc. via Rappel Holdings and Costa Del Hamilo Inc. via Mountain Bliss Resort and Development Corp. 6
SM Prime transformed Key figures in a snapshot Actual Php377.0 billion Total appraised value of Real Estate assets 7 Php48. billion Total book assets Php30.7 billion Revenues 59% 92% 87% Pro-forma/Aggregated Php599. billion Total appraised value of Real Estate assets 7 Php284. billion Total book assets,4 Php57.4 billion Revenues,4 Php20.7 million EBITDA Php0.9 billion Net income 33% 6% Php27.5 billion EBITDA,4,5 Php7.0 billion Net income,4 57.% 40.4% (6.7)%p Gearing (Net debt 2 / equity) Gearing (Net debt 2 / equity),4 ~0 hectares Total landbank 3 736% ~920 hectares Total landbank 3,6 Balance sheet figures as of 3 December 202 and Net Income figures for the year ended 3 December 202; 2 Debt, net of cash and cash equivalents, investments held for trading and short-term investments; 3 As of 3 March 203; 4 Based on unaudited results, pro forma adjustments for tender offers by SM Land, merger between SMPH and SM Land and acquisition of companies and assets from SMIC; 5 EBITDA is calculated as income from operation + depreciation and amortization; 6 Calculated by adding landbank of all companies involved in the reorganization; 7 Based on CBRE s valuation report as of 28 February 203. 7
SM Prime transformed Key figures in a snapshot (cont d) FY 202 Pro forma Revenue breakdown Residential development 40% Shopping mall, commercial and hotel & conventions 60% Total pro forma revenue: Php57.4 billion Based on unaudited results, pro forma adjustments for tender offers by SM Land, merger between SMPH and SM Land and acquisition of companies and assets from SMIC. 8
Transaction merits Transform SM prime into the Property benchmark in the Philippines In US$mm [~3.4].9.0 0.7 0.4 8.3 7.6 5. 3.9 Pro forma 2 Simplify corporate structure and increase organizational efficiencies 3 Further strengthen balance sheet and provide enhanced fund raising flexibility Total assets 2 (Php bn) Leverage 2 (Net debt 4 /Equity) Operational synergies Coordinated strategy 284 48 57.% 40.4% Enhance marketing efforts Collective managerial talent Pro forma 3 Pro forma 3 Source: FactSet as of 30 May 203; Note: US$:Php40.8 Based on 28.0bn pro forma share count (treasury shares are excluded), assuming full acceptance rate of tender offers and SMPH share price as of 30 May 203 of Php9.50; The pro forma market capitalization is for illustrative purposes only and may not be indicative of SMPH s future market capitalization. In particular, the pro forma share count is based on assumptions included in the unaudited consolidated pro forma financial statements of SMPH and SMPH s share price, taken as of 0 May 203, is not adjusted to take account of the announcement of the reorganization or any subsequent corporate events, any of which could have a material impact on SMPH s share price. SMPH s actual market capitalization following the reorganization could differ significantly to that stated 2 As of 3 December 202; 3 Based on unaudited results, pro forma adjustments for tender offers by SM Land, merger between SMPH and SM Land and acquisition of companies and assets from SMIC; 4 Debt, net of cash and cash equivalents, investments held for trading and short-term investments. 9
The Enlarged SM Prime will pursue a multi-pronged growth strategy A multi-pronged long term growth strategy Leverage the integrated platform to drive value 2 3 4 5 6 Lifestyle Cities Embark more on landmark mixeduse development projects Malls Residential Commercial Hospitality & Leisure Continue to roll out outside Metro Manila and increase penetration of China market Focus on core products and markets Focus on mid tier and affordable vertical residential developments Progressive expansion into BPO sector Build Hotels & convention centers near existing sites; Accelerate development of resort projects 7 8 Acquire strategic landbank to support long-term growth Maintain strong balance sheet, prudent risk management, efficient allocation of capital and good corporate governance practices 0
Enlarged SM Prime will develop more Lifestyle Cities going forward... MOA Complex SM Sea-side Complex SM Arena FourE-com Center SMX Convention Center Mall of Asia OneE-com Center TwoE-com Center Conrad Hotel Existing Upcoming 64-hectares of reclaimed land fronting Manila Bay 27-hectares of undeveloped landbank within the property 30-hectare master-planned development in Cebu Development started in 20 with a planned 7-0 year development timeframe
and continue focusing on high quality recurring income generation from mall operations A Continue aggressive roll out of mall development pipeline 2 Philippine malls (GFA of ~25,000 sqm) and 2 China malls (GFA of 694,000 sqm) planned to be completed in 2H203 and 205 respectively Continue roll-out in major cities outside Metro Manila where disposable income is rising significantly Philippines (GFA mm sqm) 5.9 7.2 2 China (GFA mm sqm) 0.8.5 2 Increase presence in China 202 205T 202 205T B Positioned as primary provider of SM Retail real estate needs C Explore potential acquisitions & JVs Affiliate, SM Retail plans to open 2 SM Department stores, 2 SM Supermarkets, 6 SaveMore stores and 7 SM Hypermarkets in 203 Opportunities to optimize use of existing stores by adding third party tenants Entry into the community malls segment through partnership with WalterMart Accelerate expansion with inventory of 8 community malls Shopping mall business contributed over 70% of Proforma FY202 net profit Based on unaudited results, pro forma adjustments for tender offers by SM Land, merger between SMPH and SM Land and acquisition of companies and assets from SMIC 2 Company target. 2
Capital expenditure program to support growth Business Segment 203 Capex plan % of total Gearing (Net debt/equity) Shopping mall Php35.0 billion 58% Residential Php20.2 billion 33% 57% 40% Commercial Php2.9 billion 5% Actual 3 Pro-forma 2,3 Hospitality, Tourism & Others Total Php2.3 billion 4% Php60.4 billion +76% vs. 202A Strong recurring internally generated cash flows to support capex Expected to increase capital market funding options in addition to debt headroom Calculated as net debt (net of cash and cash equivalents, investments held for trading and short-term investments) divided by total equity; 2 Based on unaudited results, pro forma adjustments for tender offers by SM Land, merger between SMPH and SM Land and acquisition of companies and assets from SMIC; 3 as of 3 December, 202. 3
Company Briefing May 203 Positioning SM Prime for the next stage of growth