SM Prime says 'not the right time' for REIT

SM Prime Holdings Inc. (SMPH) on Tuesday said it is still not the right time to launch its real estate investment trust (REIT) which it initially targeted to establish by the second half of 2023, citing the prevailing market conditions.

According to SMPH president Jeffrey Lim, the company continues to evaluate the prevailing market conditions before it pushes through with its $1-billion REIT.

“I don’t think it’s the right time for us,” he told reporters during a media briefing in Pasay City.

“Given the interest rate environment and the market volatility, I don’t think we can do it this year, honestly, we will continue to assess as we move forward because so far, we’re able to fund our requirements through borrowings” he said.

SMPH earlier said it was looking to launch its REIT by the second half of 2023, which would, in turn, finance its reclamation project in Pasay City dubbed as the SM Smart City.

It earlier said it intends to raise $1 billion from the REIT, with the latest valuation estimated at $2.5 billion to $3 billion.

This would initially cover between 12 to 15 malls from 30 to 35 fully matured shopping centers across the country, with the rest to be included in the future for the growth of the unit.

Chief finance officer John Nai Peng Ong said that while the company still considers the REIT as an option to finance the project, it is also looking at borrowing.

“It’s a matter of timing. We continue to look at retail REIT as an option other than the borrowings, but its a timing matter, considering the market conditions at this point in time,” he said.

According to SM Smart City president Glenn Ang, the reclamation project is still on track to be handed over four years from now in 2028.

“The project right now is on track. We are following our timeline. It has not moved yet. So far we have worked out a catch-up program in order to speed up, to catch up on our timeline, so as we committed, this will be handed over in 2028,” he said in the same briefing.

Moving forward, SMPH is set to open three new malls this year — SM Bataan, SM Center San Pedro in Laguna, and SM Sto. Tomas in Batangas.

SMPH has allocated a P100-billion capital spending program for 2024, with majority or 65% to be funded internally, while the remaining 35% to be done through fundraising, with a net increase due to the coastal development.

The company ended 2023 with a 33% increase in its net income to P40.863 billion, as revenues climbed 21% to P128.097 billion, while costs and expenses grew 18% to P66.818 billion.

It currently has 85 malls in the Philippines, and eight in China in the cities of Xiamen, Jinjiang, Chengdu, Zibo, Chongqing, Tianjin, and Suzhou.

It already has 91 residential developments, 18 office buildings, 10 SM hotels, six convention centers, and two trade halls.

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

Shares in SMPH were last traded at P28.20, up by 30 centavos or 1.08% from Monday’s finish of P27.90. — RSJ, GMA Integrated News