SM Prime Holdings Inc., the country’s biggest mall developer, is dropping a plan to raise as much as $500 million through a Philippine real-estate investment trust (REIT) offer.

SM bared this after the finance department placed more stringent public ownership and tax requirements on the law’s implementing rules.

SM Prime Chief Financial Officer Jeffery Lim said on Thursday that the company is particularly concerned with the requirement that a REIT should sell 67 percent of its ownership to the public within three years of listing.

The figure has been criticized by local real-estate players and private-sector groups as being the highest among other countries with a REIT framework.

SM Prime is abandoning its plans for the REIT “given the current public ownership structure,” Lim said, adding that the company will seek other forms of fundraising for projects “given that there’s plenty of liquidity for capital raising.”

Other major real-estate players have been similarly discouraged by the government’s requirements, and may eventually resort to seeking an amendment to the REIT law itself, market watchers earlier said.

Another point of contention is the inclusion of the 12-percent value-added tax on initial property transfers, which would mean greater costs for companies setting up REITs.

Philippine Stock Exchange President Hans Sicat said in an interview on Thursday that the bourse has yet to receive applications for REITs, whose tax rules were released early last week.

Before the government insisted on changes to the law’s implementing rules, SM Prime and other major builders, such as Ayala Land Inc. and Robinsons Land Corp. had expressed their interest to hold REIT offers, at the time estimated to be worth a combined $1 billion.

Lim made the comments following a briefing held by parent firm SM Investments Corp. (SMIC) on Thursday. The listed holding firm of billionaire Henry Sy announced that its net income in the six months to June rose 13 percent to P9.64 billion. Revenues also increased 9 percent to P92.94 billion.

SMIC Chief Finance Officer Jose Sio said during the briefing that growth will be sustained, with full-year profit expected to end 12 percent to 14 percent above 2010.

The company said profit contributions in the six months to June were led by banking, accounting for 31.4 percent, followed by its retail and mall units with 30.4 percent and 23.3 percent, respectively. The real-estate business accounted for 14.9 percent.

“SM consistently met its targets during the first six months of this year,” SM President Harley T. Sy said in a statement on Thursday. “We intend to maintain this healthy level of performance, thus we are committed to challenge ourselves further and to continue seeking opportunities for added growth and expansion,” he added.

SMIC said its Banco de Oro Unibank Inc. registered an unaudited net income of P5 billion  in the first half of 2011, up by a fifth. Net interest increased to P17 billion, while gross customer loans expanded almost a quarter to P 610.10 billion. Total deposits grew 16 percent to P802.50 billion while noninterest income rose 22 percent to P10.4 billion.

China Banking Corp. saw profit rise 11.4 percent to P2.35 billion in the first six months. The company said this was driven by improvements in the bank’s core operations, as well as increased contributions from bancassurance.

The retail group said first half sales rose 7 percent to P67.69 billion, translating into a net income of P2.58 billion, almost flat compared with the same period in 2010.

For the first six months of the year, the retail group opened one department store, two supermarkets, seven SaveMore branches, and one Hypermarket, bringing the total number of stores to 150.

SM Prime said net income increased 14 percent to P4.27 billion as it opened more shopping centers. Revenues also added 12 percent to P12.71 billion during the period.

The company credited gains to the opening of new Philippine malls in 2010, higher same store sales and the improved performance in SM’s China malls, and lower borrowing costs. By year-end, SM Prime will have 43 malls in the Philippines and four in China.

SMIC’s real-estate group said net income jumped almost a third to P2.24 billion, while revenue increased 39 percent to P8.5 billion.

Listed SM Development Corp. accounted for 86 percent of the property group’s profits. The developer, whose revenues rose 65 percent to P7.14 billion in the six months to June, said it will launch six new projects this year.

Meanwhile, SM Hotels and Conventions Corp. recently opened the Pico Sands Hotel at the Pico De Loro Cove of Hamilo Coast, which is SM’s large-scale resort and ecotourism project in Nasugbu, Batangas. –With Bloomberg News