No SM Prime REIT IPO coming to mart this year

High interest rates and market volatility have pushed back the plans of Sy-led property giant SM Prime Holdings Inc. to launch its real estate investment trust (REIT) this year, delaying what would be the country’s largest initial public offering (IPO).SM Prime president Jeffrey Lim on Tuesday said 2024 was “not the right time” to launch the $1-billion initial public offering (IPO) of their REIT.

“For this year, I think we might not be able to do it because of the interest rate environment, and the market is not good at this time to do a REIT [listing],” he told reporters during the company’s annual stockholders’ meeting.

Lim is likewise banking on his company’s “strong” cash flow in continuing its growth in the absence of the REIT IPO, which would have allowed the company to recycle capital from existing assets that generate recurring revenues.

The property giant’s net income last year ballooned by 33 percent to P40 billion as its shopping mall business rebounded postpandemic. Consolidated revenues, meanwhile, reached P128.1 billion, up by 21 percent.

Reclamation on track

Proceeds from the listing of the REIT were meant to bankroll SM Prime’s several expansion plans, including a $3-billion reclamation project in Manila Bay that is set to be completed by 2028.

The big-ticket project will span 360 hectares, roughly the size of around five Mall of Asia complexes. SM Prime plans to develop the project into a mixed-use township development.

According to Lim, they will fund the project mostly through loans.

Chief financial officer John Nai Peng Ong clarified that the postponement of the REIT launch would not affect the progress of the reclamation project.

“The project is on track and we are following our timeline … We have worked out a concept program in order to speed up and catch up on our timeline,” he said.“As committed, [the project] will be handed over in 2028,“ Ong added. INQ