SM Prime Holdings' board has approved the purchase of three SM malls owned by the Sy family in China for P10.8 billion.

"While SM Prime continues to expand its operations in the Philippines, its planned acquisition of the China malls will provide its shareholders the opportunity to tap and take advantage of the high growth prospects offered by China, being Asia's growth leader," Sy said in a statement.

"The move will allow SM Prime to gain a foothold in China's fastgrowing economy."

The acquisition price was based on a 20-percent discount to the gross appraised value of the properties. SM Prime will swap 913 million of its new shares at a 30-day volume weighted average price for the malls.

The mall builder expects to enter into definitive agreements in connection with the acquisition in early 2008 and complete the purchase within the first half of next year.

The malls, which are located in Xiamen, Jinjian and Chengdu in China, have a combined gross floor area of 468,000 square meters.

Among the anchor tenants of the three malls are Wal-Mart and SM-Laiya Cybermart and Wanda Cinema. Other tenants include Watsons, McDonald's, Giordano, Pizza Hut and a number of China-based outlets and stores.

SM Prime earlier appointed Citigroup Global Markets Limited and Macquarie Securities Pte Limited as its financial advisers for the acquisition. Savills Valuation and Professional Services Limited was tapped as independent asset appraiser.

The company said it may initially build one to three malls every year in China's second- and third-tier cities.

SM Prime Holdings Inc., the mall development unit of conglomerate SM Investments Corp., said Wednesday its nine-month net profit rose 11 percent to P4.3 billion, buoyed by higher rental revenues.

The company said its gross revenues for the period grew 19 percent to P11.2 billion, with rental revenues rising 19 percent to P9.2 billion.

"SM Prime is well on track to meet its full-year target, and we look forward to a vibrant Christmas holiday season to boost our fourth quarter results. We also expect November to be a month of opening new malls in Taytay, Muntinlupa and a strip mall to be called San Miguel by the Bay, which is like an extension of the SM Mall of Asia," said Hans Sy, president of SM Prime.

By end-2007, total gross floor area for all SM Prime malls is projected to reach 3.9 million square meters (sqm).

SM Prime is expanding its existing malls such as those in North EDSA and Cebu. It recently expanded SM City San Fernando in Pampanga with the opening of another annex.

[ABS-CBN Interactive]