Posted on 08:31 PM, April 27, 2010 [ BusinessWorld Online ]
SM Prime Holdings Corp., the Philippines’ biggest mall developer, plans to raise as much as $500 million from an offer of real estate investment trust (REIT) sometime in the second half.
The company’s board has authorized the management to pursue the offer, Jeffrey Lim, SM Prime chief finance officer told reporters yesterday at the sidelines of the firm’s annual stockholders’ meeting.
“We are in the process of selecting an international valuation company and from that we will select the mix of assets that we will put into the REIT,” he said.
The latest figure, an upgrade from the $300-million SM Prime announced in February, will involve as much as 18 local malls. It is the biggest amount so far disclosed by a local firm for a foray into REITs.
“The potential use for the REIT will be for the expansion program, to pay debts, and give back to shareholders,” Mr. Lim said.
In December, the REIT bill, which will allow companies to use pooled capital of investors to buy and manage income-earning property and mortgages, lapsed into law. Last week, the Securities and Exchange Commission released a draft of the implementing rules for the REIT law.
“We believe that SM Prime would be well-positioned to show the potential value of its assets, which have appreciated tremendously over the years as a result of operational efficiency, proper maintenance, expansion and introduction of new features and concepts into our existing malls,” SM Prime President Hans T. Sy said in a statement.
Mr. Lim said SM Prime would pursue the REIT first before securing funds through bonds.
In mid-April, property giant Ayala Land, Inc. also signified its intent to secure a minimum $300 million from the REIT for additional capital.
Meanwhile, profits of the mall developer and operator went up by a tenth to P1.9 billion in the first three months of the year on the back of a 15% revenue increase to P5.4 billion from P1.7 billion year on year.
“The earnings outlook of SM Prime is consistent at 8%-10%. The first-quarter growth already reflects what is for the full year,” Alex Pomento, head of research, Macquarie Holdings (USA), Inc., said in an interview.
The board of SM Prime also approved yesterday a P3.4-billion cash dividend or P0.25 cents per share.
This year, SM Prime has allotted P12 billion -- P8 billion for the Philippines and P4 billion in China -- for capital expenditures.
This year, SM malls will rise in Calamba and San Pablo in Laguna, Tarlac City, Novaliches in Quezon City, Masinag in Antipolo, and Suzhou in China.
By the end of 2010, SM Prime will have 40 malls covering 4.7 square meters of gross floor space in the Philippines.
Shares in SM Prime shed P0.25 each yesterday, from P10.25 on Monday. -- Neil Jerome C. Morales and Reuters
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