SM Prime says no REIT for 2025

SM Prime Holdings Inc. (SMPH) on Tuesday said it has no plans to launch its real estate investment trust (REIT), which it initially targeted to establish by the second half of 2023, due to the prevailing market conditions.

According to SMPH president Jeffrey Lim, the company will instead tap the debt market to partly finance its P100-billion capital expenditure program for the year, while the rest will be financed internally.

“I think not within the year given market conditions,” he told reporters in Pasay City.

“The REIT is not a priority as of the moment, again because of market conditions and because we’re able to tap naman our debt. We’ve always tapped the debt market so far, and okay naman, and so we don’t intend to prioritize the REIT at this time,” he added.

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 intended 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.

“At this time kasi, we’re able to tap the debt market and so far we didn’t have any problems with liquidity. Number two, there’s a lot of external challenges right now, and the market is not… It’s not like a good time, opportune time to do the REIT eh, so we just have to wait,” Lim said.

SMPH reported an 11% increase in its first-quarter net income to P11.9 billion, while its attributable net income climbed 11% to P11.7 billion, and revenues rose by 7% to P32.8 billion.

The malls business was the biggest contributor to overall profitability accounting for 69% of earnings, with P8.1 billion. The residential unit accounted for 18% of the company’s net income with P2.1 billion, the office and warehouse with 10% or P1.2 billion, and the hotels and convention centers with 3% or P362 million.

The company’s 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.

“We are confident and optimistic that we can sustain this given the developments that we are planning in the next nine months,” he said.

“While external uncertainties persist, our focus remains on disciplined execution and staying the course… We have a solid foundation, and we are confident in our capacity to generate long-term, sustainable value for our shareholders,” he added.

Shares in SM Prime were last traded at P22.90 apiece, down by 30 centavos or 1.29% from Monday’s finish of P23.20 per share. — BM, GMA Integrated News