The Sy family-controlled SM Prime Holdings Inc., one of the leading integrated property developers in Southeast Asia, is not likely to push through with the $1 billion initial public offering (IPO) of its real estate investment trust this year due to adverse market conditions.
In a media and analysts’ briefing held after the firm’s annual stockholders’ meeting, SM Prime President and CEO Jeffrey Lim said that “given the interest rate environment and market volatility, I don’t think we can do it this year, honestly. I think it’s better for us to postpone it. But we will continue to assess as we move forward.”
SM Prime Chief Finance Officer John Nai Peng C. Ong added that “it’s a matter of timing. We continue to look at retail REIT as an option but it’s a timing matter considering the market conditions at this point in time."
“How can you do an IPO when investors are viewing the market as ‘risky” because of ongoing wars and geopolitical tensions,” noted Jose T. Sio, chairman emeritus of SM Prime’s parent company SM Investments Corporation.
SM Prime initially planned to undertake its REIT IPO late in 2022 to help fund its massive P136 billion capital expenditures for 2023 to 2024 including a portion of the $2.5 billion to $3 billion needed for the reclamation project along Manila Bay.
However, Lim said the delay in the REIT IPO will now affect the company’s expansion plans because “so far we are able to fund our requirements thru borrowings.”
He noted that “it will take a couple of years before we complete the project so in terms of timeline, we don’t need to borrow the entire cost in one go,” adding that the $3 billion estimate includes the horizontal development of the property after its reclamation.
Ong said, “the (reclamation) project is on track. We are following our timeline. It has not moved yet. We have worked out a concept program in order to speed up, catch up on our timeline. As we committed, this will be handed over in 2028.”
Lim said SM Prime is looking at P100 billion for its capital expenditure program for 2024, 25 percent more than the P8 billion spent last year, as it remains committed to its role as a catalyst for economic growth, delivering innovative and sustainable lifestyle cities, thereby enriching the quality of life of millions of people.
Of the P100 billion capex, about P20 billion is for this year’s budget for the ongoing reclamation project.