SM Prime junks $500-M REIT launch

MANILA, Philippines - SM Prime Holdings Inc., the country’s largest retail landlord, has junked plans to launch a real estate investment trust (REIT) due to stringent rules that require a minimum 40 percent public float for the first two years from listing.

“We don’t think we’ll avail of the structure given the minimum public float rule,” said SM Prime chief finance officer Jeffrey Lim in a briefing.

SM Prime was earlier looking to raise $500 million through the issuance of REITs and even tapped CLSA and Macquarie as financial advisers for its planned fund-raising activity.

The Philippine Stock Exchange (PSE) and several property developers have raised a howl over the ruling, saying the the gradual increase of the minimum public ownership to 67 percent by the third year would lessen the competitiveness of the local REIT industry against its global counterparts.

Asia Pacific Real Estate Association (APREA) chief executive officer Peter Mitchell noted that the Philippines has the highest public float requirement for REITs among the countries in the ASEAN region -- Singapore (10 percent), Australia (25 percent), Hong Kong (25 percent) and Malaysia (25 percent).

The PSE sought a review of the minimum public ownership rule saying such should would make the Philippines least conducive for investments and cross-border trading.

The REIT Act was enacted into law in December 2009 but its implementation had been in peril due a deadlock between fiscal authorities and corporate regulators over its implementing rules.

The REIT market was earlier estimated to generate at least $1 billion from the listing of major property firms, which could be funneled into specific priority areas that the Aquino administration are focusing on, like infrastructure, mass housing, BPO, tourism and similar ventures.