Posted on 08:59 PM, September 26, 2010 [ BusinessWorld Online ]
SM Investments Corp., the holding firm of the mall, banking and property conglomerate led by Henry Sy, Jr., is planning to list its hotel group as real estate investment trust (REIT).
The company is kick-starting its bid to build a hospitality chain with its first hotel in Cebu, officials said late last week.
“[Listing] is a future proposition for the hotel business,” Jose T. Sio, chief finance officer of SM Investments Corp., told reporters.
Mr. Sio said SM Hotels and Conventions Corp. is a candidate to be REIT, which pools income-generating property and can raise money by listing on the stock exchange.
By the end of 2010, the hotel unit will have a total 810 rooms from 260 and 27,278 square meters of convention center space.
Mr. Sio said the conglomerate was looking at a minimum of seven hotels before a REIT listing, which will likely follow that of the mall arm of the SM group.
In April, SM Prime Holdings, Inc., the country’s largest mall operator, announced plans to secure $500 million through a REIT.
A bill granting tax perks to REIT firms lapsed into law last December, but it has yet to be implemented because REIT tax rules have yet to be cleared by the Bureau of Internal Revenue.
The Finance department wants REIT firms to sell more than 50% of shares to the public, higher than the minimum 33.3% under implementing rules of the Securities and Exchange Commission.
Under Republic Act 9856, a REIT company will be entitled to tax incentives and privileges, including a lower creditable withholding tax rate of 1% for income payments received as well as reduced documentary stamp taxes for the sale or transfer of property.
As the company awaits government regulations, it will seek to establish a foothold in the local hotel business.
Included in the portfolio of SM Hotels and Conventions is the Taal Vista Hotel in Tagaytay and the 150-room Pico Sands at Pico de Loro in Nasugbu, Batangas.
Mr. Sio said the hotel group has also signed a deal for a second Radisson Blu hotel at the SM Mall of Asia complex in Pasay. It will have 400 to 500 rooms.
The conglomerate will open today the SM Radisson Blu Cebu, Christina Bautista, vice-president of SM Hotels and Conventions, told reporters.
The 400-room Radisson Blu Hotel Cebu will be the Carlson hotel group’s first Radisson Blu hotel in the Asia-Pacific. Ms. Bautista said the company was aiming for the upscale market.
SM Investments has five core businesses -- retail (SM Retail, Inc.), malls (SM Prime), banking (Banco de Oro Unibank, Inc. and China Banking Corp.), property (SM Development Corp.) and hotel and entertainment (SM Hotels and Conventions).
Shares in SM Investments rallied by 4.53% or P23.00 to P530.00 each on Friday. -- Neil Jerome C. Morales
_____________________________________________________________
