SM Prime eyes launch of $1-billion REIT in 2nd half of 2023

SM Prime Holdings Inc. (SMPH) is looking at launching what could be the country's biggest real estate investment trust (REIT) by the second half of the year, which will in turn finance its reclamation project in Pasay City.

According to SMPH president Jeffrey Lim, said the firm expected $1 billion in proceeds from the REIT, as it has already started the process of incorporating the company. It is now in talks with advisers, banks, and its legal counsel.

“Hopefully we can launch the REIT by the second half of the year, of course, subject to market conditions, especially now that interest rates still keep on moving up, so hopefully in the second quarter it will stabilize,” he told reporters in Pasay City.

The Monetary Board of the BSP has already hiked key policy rates by 425 basis points since May 2022, with the latest being a 25-basis point increase that took effect on March 23 to bring the benchmark rate to 6.25%.

SMPH intends to raise $1 billion from the REIT, with the total valuation estimated at around $3.5 billion to $4.5 billion.

It is set to cover an initial of between 12 to 15 malls from 30 to 35 fully matured shopping centers across the country, with the rest seen to be included in the future for the growth of the unit.

“We actually have the portfolio details already, but we’re still doing some evaluation with bankers and I think the key is the timing because interest rates are still very volatile,” Lim said.

“We want to make sure that when we launch it, it will be something that will be sustainable, and we want to deliver on our commitments,” he added.

Lim said a large chunk of the proceeds will finance the reclamation project in Pasay, where the company has already completed Island A which is estimated to be around 60 hectares.

Dredging and reclamation activities continue in the area, with completion seen in the middle to the second half of 2024. The other areas — Islands B and C — are set to have a combined 300 hectares, which can be usable in three to four years.

SMPH’s business segments include residential, commercial, hotel, and convention centers, and malls with 82 shopping centers across the country.

Its subsidiaries include SM Development Corp., Costa del Hamilo Inc., Tagaytay Resort Development Corp., SM Arena Complex Corporation, SM Hotels and Conventions Corp., and SM Land (China) Limited.

SMPH recorded a 38% increase in its 2022 net income to P30.1 b billion, as consolidated revenues jumped by 29% to P82.3 billion.

Shares in SMPH closed Tuesday down by P0.25 or 0.74% at P33.70 apiece from Monday’s finish of P33.95. —NB, GMA Integrated News