SM Prime plans launch of USD 1B mall REIT by 2nd semester

SY-led SM Prime Holdings, Inc. is targeting to launch its first real estate investment trust (REIT) in the second half of the year from which it expects to raise USD 1 billion.

“We actually intend to raise about USD 1 billion,” SM Prime Jeffrey C. Lim said during a media and analysts briefing on Tuesday. “Total valuation [for the REIT] will be around USD 3.5 billion to USD 4 billion.”

Portfolio details for the REIT are ready and will initially be composed of 12 to 15 centers, he said, adding that around 30 to 35 of the company’s 82 malls nationwide are fully matured, making it possible for the company to initially transfer 12 to 15 of them to the REIT.

“We are still doing some evaluation with bankers. And we believe that the key really is the timing,” Mr. Lim said.

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

For 2023, the company is earmarking PHP 80 billion for capital expenditure, SM Prime Chief Financial Officer John Nai Peng C. Ong said. The amount is about the same as what the company had allotted for its spending budget last year.

He said the allotted budget will “significantly” be spent on the malls and SM Prime’s residences, while around 10% will be for the firm’s leisure, commercials, hotels, and convention centers.

The year’s budget does not include the expenditure for the Pasay reclamation project, which will create a 360-hectare lot that will connect to the Mall of Asia Complex.

SM Prime intends to put in a USD 2-billion budget for the project, with the first $1 billion set to be used for 2023 and funded through the REIT.

“The proceeds of the REIT will be used for SM Prime’s expansion project,” Mr. Lim said. “Large chunk of the proceeds from the REIT will be for the reclamation project.”

In 2022, SM Prime reported a 38.1% growth in its consolidated net income to PHP 30.1 billion from PHP 21.8 billion a year earlier. The listed holding firm’s consolidated revenues increased by 28.6% to PHP 105.8 billion last year from the PHP 82.3 billion recorded in 2021.

For 2023, Mr. Lim said that he expects the company’s retail segment to drive revenue growth as the collection of full rental fees continues coupled with growing mall foot traffic.

On Tuesday, shares in SM Pride declined 25 centavos or 0.74% to PHP 33.70 apiece. — By Justine Irish D. Tabile