PSE Circular for Brokers No. 600-99

March 9, 2000 PSE CIRCULAR FOR BROKERS NO. 600-99 TO : Ms. Grace B. De Guia Assistant Manager The Philippine Stock Exchange FAX NO. : 636-0809 FROM : Mr. Jose T. Sio SM Prime Holdings, Inc. FAX NO. : 893-4954 DATE : 8 March 2000 Dear Ms. de Guia : This refers to your fax message dated March 8, 2000. We would like to confirm that SM Prime Holdings Inc. is not currently involved in various projects mentioned in your fax message. Very truly yours, (SGD.) JOSE T. SIO SVP-Finance SM planning to put up three mid-income hotels Mall giant SM Group of Companies of retail tycoon Henry Sy is planning to diversify its business from retailing to hotel operation as it announced plans to put up three hotels within the next five year. In an interview with reporters during last Monday's Quality Britain Retail Forum held at the Peninsula Manila Hotel, SM Prime Holdings, Inc. (SMPH) senior vice-president for operations Hans T. Sy said entering the hotel business has long been a plan of the elder Sy. LexLib "We believe there are opportunities to go (into the hotel business). It's been a long-time plan of my father to go into the tourism business. We plan to construct three hotels that will target the middle-income market," the younger Sy said. The SM Group plans to put up hotels in key cities, namely, Cebu, Tagaytay and Baguio, where a significant number of tourists flock every year. The SM official said construction of the Cebu hotel has started last year. Mr. Sy said it will cost the SM Group around P1.5 billion to construct one hotel. Despite the plan to diversify into other businesses, Mr. Sy said the SM Group will still give priority to developing new malls. The mall leader is targetting to open at least two SM stores every year. Scheduled for opening this year are SM City-Pampanga in October. The two new malls will be added to SM's existing eight malls located in Metro Manila, Cavite, Cebu and Iloilo. The mall giant is also planning to put up three new malls over the next two years in Paraaque, Davao and Cagayan de Oro. This will be mini-malls measuring around 50,000 square meters to 60,000 square meters. The SM Group is also currently constructing the 500,000-square meter Mall of Asia which is Mr. Sy's most ambitious project ever as it is earmarked to be one of the biggest shopping malls in the world. Moreover, the group is also negotiating for the possible involvement in the commercial component of Fort Bonifacio. The group will also be bidding for the P50-billion Asset Disposition Program of the Bases Conversion and Development Authority which will happen in June. The mall giant is likewise eyeing the 19-hectare Greenhills property which Ortigas and Company has recently put up on the auction block. "We have no plans for the Greenhills property yet but with the kind of prices we're looking into, we believe that's a multi-development. These include condominiums and all those kinds of things. We've signified our interest but nothing concrete yet," Mr. Sy said. The retail tycoon has also announced plans to expand overseas and will be tapping a wholly owned holding firm based in China as vehicle for the planned regional expansion. Flagship firm SMPH derives its revenues from rental payments, of which 80% is rental revenues based on a percentage of tenant's gross sales while the remaining 20% comes from a fixed monthly rate. Last year, SMPH's cash position is seen to have exceeded P11.2 billion with net earnings estimated to have reached P3 billion to 3.1 billion.