SM Prime Holdings plans P56-B REIT later this year
SM Prime Holdings [SMPH 33.70 0.7%; 72% avgVol] [link], the property development arm of the Sy Family’s vast empire of corporate interests, said that it is planning to raise “up to $1 billion” (P55.6 billion) from the IPO of a new REIT in the second half of 2023.
SMPH President, Jeffrey Lim, said that the REIT would contain 12 to 15 of SMPH’s 35 to 39 “fully mature” shopping malls.
The total valuation of the REIT is estimated to be between P194 billion and P250 billion.
SMPH said that it could use the proceeds of the sale to fund the reclamation and initial development costs of SM Smart City, the 726-hectare reclamation project that SMPH is planning for the Pasay and Paranaque side of Manila Bay.
For reference, SM Mall of Asia was built on 100 hectares of reclaimed land back in 2006.
MB BOTTOM-LINE
REITs need to have a minimum public float of 33% of the REIT’s outstanding shares, so provided the Sy Family doesn’t plan to list the REIT with a war chest of cash, it’s safe to assume that the P55.6 billion that SMPH is looking to raise is likely to represent somewhere close to 33% of the company’s shares, making the total value of the REIT somewhere in the neighborhood of P168 billion ($3 billion at today’s exchange rate).
The largest IPO to ever hit the PSE was Monde Nissin back in June 2021, which raised P48.6 billion at an enterprise valuation of P242 billion.
If SMPH sold 33% of SMPH REIT at an enterprise value of $4.5 billion (P250 billion), it would need to sell around P82 billion worth of REIT stock to hit that minimum requirement.
SMPH clearly has the juice to fill its REIT’s portfolio with enough goodies to reach that kind of valuation, but would they actually do that?
If they did, they’d nearly double the PSE IPO record.
--
Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
- Latest
