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Business

SM takes control of Philippine dormitory developer

'Dormitels' near workplaces attracting young professionals

Manila’s gridlocked traffic is encouraging young professionals to consider ‘dormitels’ as an accommodation option to keep commutes manageable.

MANILA -- SM Investments, a leading Philippine conglomerate, has acquired a dormitory developer and entered the rental housing as condominium sales in the capital slow due to a supply glut.

SM informed the Philippine Stock Exchange on Monday of its purchase of a 61.2% stake in Philippine Urban Living Solution (PULS) after the transaction was passed by antitrust authorities last month.

SM did not disclose the value of the deal, saying the "amount is not material" as it is less than 10% of SM's net book value.

PULS, which counts Mark Mobius's Templeton Strategic Emerging Markets Fund among its investors, develops and runs dormitories under the MyTown brand. It has five with over 1,000 beds in Metro Manila, according to its website, and has plans for up to 15 in the next few years, according to local reports.

The MyTown format has attracted young professionals wanting to dodge the capital's notorious traffic jams during commutes. Last year, KLab, a Japanese game developer, teamed up with MyTown to lodge staff.

Jose Sio, SM's chief financial officer, said the PULS investment will enable the group to study the MyTown business model -- "a new idea" in the real estate space.

"This acquisition allows SMIC to capture growth opportunities in the 'dormitel' segment," the stock exchange filing said.

SM Prime Holdings, SM's real estate subsidiary, is diversifying its housing portfolio with more affordable condominiums and horizontal housing developments. The conglomerate runs the biggest mall network in the Philippines, as well as hotels, resorts, and event centers.

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