SM Prime Posts 35.4 Billion Pesos in 9-Month Profit, Down 5%

Key Facts

SM Prime reported net income of 35.4 billion Philippine pesos in the first nine months of 2026, down 5% from 37.2 billion pesos in the same period of 2025. The company said weaker property sales offset gains in rental income and other revenue. Consolidated revenue was broadly unchanged at 103.1 billion pesos, compared with 103.4 billion pesos a year earlier. Results showed a divergence between its malls, offices and hospitality businesses, which recorded growth, and the residential segment, where revenue declined. Company President Jeffrey C. Lim said higher borrowing costs, inflation and consumer caution continued to weigh on residential demand.

Rental income rose 8% to 66 billion pesos from 61 billion pesos in the comparable nine-month period, while other revenue increased 17% to 13.1 billion pesos from 11.2 billion pesos. Other revenue includes leisure and entertainment activities, hotel restaurant operations, advertising and sponsorships. By contrast, property sales fell 23% to 24 billion pesos, compared with 31.2 billion pesos a year earlier. The company said the decline in property sales erased the effect of growth in rental income and other revenue on net income. Total revenue therefore remained broadly flat despite diverging trends among its main income sources.

Malls accounted for 62% of total revenue, with revenue rising 10% to 63.7 billion pesos from 58.2 billion pesos in the same period a year earlier. The company attributed the growth to added leasable space, higher tenant occupancy and demand for dining and experiential offerings. Office and warehouse revenue also increased 10% to 7.8 billion pesos from 7 billion pesos, supported by higher occupancy rates. The hospitality, meetings, incentives, conferences and exhibitions segment grew 7%, with revenue reaching 6.4 billion pesos from 6 billion pesos. The company linked the segment's performance to hotel bookings, average room rates and demand for meetings, conferences and events.

By contrast, the residential segment accounted for 25% of revenue, but its revenue fell 21% to 25.6 billion pesos from 32.6 billion pesos in the first nine months of 2025. The company attributed the decline to slower revenue recognition and buyer cancellations. Lim said higher borrowing costs, elevated inflation and consumer caution affected residential demand. He added that growth in commercial and hospitality activities helped stabilize revenue, while cost management eased pressure on earnings. The company said operating expenses and the cost of properties sold remained stable at 51.3 billion pesos, compared with 51.5 billion pesos a year earlier.

The company's third-quarter net income fell 15% to 10.9 billion pesos from 12.8 billion pesos in the same quarter of 2025. Quarterly consolidated revenue declined 11% to 31.4 billion pesos, compared with 35.4 billion pesos a year earlier. The quarter's performance came within nine-month results that combined lower profit with stable overall revenue. Capital expenditure totaled 44.4 billion pesos from January to September, down 25% from 59.3 billion pesos in the comparable period. The company said most capital spending went toward developing malls and residential projects.

SM Prime is entering a five-year capital program beginning in 2026 to expand its mall network to more than 100 malls nationwide by 2030. The company allocated more than 150 billion pesos for new buildings, upgrades and expansions under the program. The plan follows a 7% rise in the company's 2025 net income to 48.8 billion pesos from 45.6 billion pesos in 2024. Revenue in 2025 was about 141.1 billion pesos, compared with 140.4 billion pesos the previous year. The decline in capital spending in the first nine months of 2026 places the ongoing rollout of commercial and residential projects in the context of the program announced through 2030.