Sy, chair of SM Prime’s executive committee and board member, said they have strong cash flows and access to viable debt alternatives. These were the same reasons cited for delaying the mega IPO amid volatile markets last year, which remain valid today.
“Quite frankly, I’m not even thinking about [an IPO],” Sy told InsiderPH on the sidelines of the 2025 Annual Bankers’ Reception, or Bankers’ Night, held at the Bangko Sentral ng Pilipinas last Friday.
“Don’t get me wrong. I’m very positive about the market. But I keep saying, we have very strong cash flows and we’re still the conservative company my father [taipan Henry Sy Sr.] started,” he added.
Big picture
Apart from Globe Telecom’s GCash, SM REIT is another anticipated big-ticket IPO for the Philippine Stock Exchange.
Starting with the opening of SM North EDSA in 1985 during the final years of the Marcos Sr. administration, SM Prime has grown into a P700 billion real estate conglomerate.
It now operates 87 malls in the Philippines, 8 in China, along with residences and hotels.
No mall IPO…ever?
Sy remains doubtful the planned listing, first unveiled two years ago under a proposed real estate investment trust (REIT) structure, will proceed in 2025.
“I’m being very honest, it might not even happen [ever],” he added.
SM Prime previously announced plans to transfer and list 12 to 15 shopping malls to a REIT.
The eight other REITs on the PSE are AREIT Inc. (Ayala Group), Citicore Energy REIT (Edgar Saavedra), DDMP REIT (Edgar "Injap" Sia II, Tony Tan Caktiong), Filinvest REIT (Gotianun Group), MREIT (Kevin Tan), Premier Island REIT (Villar Group), RL Commercial REIT (Gokongwei Group), and VistaREIT (Villar Group).
REIT not the best option for now
Shopping malls played a critical role in stabilizing SM Prime’s earnings during the post-pandemic era, paving the way for record earnings in 2023—a feat likely to be repeated in 2024, company president and CEO Jeffrey Lim said in a previous interview.
Sy is also concerned about reducing SM Prime’s portfolio through a REIT, which allows owners to raise capital by transferring recurring income-generating properties, such as shopping malls, and listing these under a separate entity.
“The way I understand a REIT is I’ll be taking assets from one pocket and putting it in the other pocket to raise money,” Sy said.
“But I can do fundraising with my own cash flow. Also, if I take out, say 20 malls, from SM Prime, then SM Prime’s assets also go down,” he added.
Deal maker’s view
“SM has so many funding alternatives, from peso bonds to their medium-term note [US dollar issue],” said Eduardo Francisco, president of deal arranger BDO Capital & Investment Corp., also owned by the Sy family.
“A REIT is just one of them. But if pricing and demand are uncertain because of global headwinds, they can tap their other standby facilities,” he told InsiderPH.
In April last year, SM Prime and parent firm SM Investments Corp. created a $3 billion Euro medium-term note program to support its expansion requirements.
SM Investments raised $500 million in July 2024, while SM Prime has yet to access the debt facility.
No need to rush
The developer reported a consolidated net income of P33.9 billion in the first three quarters of 2024, up 12 percent from P30.1 billion in the same period in 2023.
This already represents 85 percent of 2023’s total profit, putting the company on track to surpass its record income.
“If you look at our group’s growth, it’s steady, there’s no one-time big time thing,” Sy said.
“There's something my father always used to say: ‘Why rush when we’re going to reach our goal somehow. What’s important is we get there without much stress,” he added.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
