SM Investments Corp., the holding company of retail tycoon Henry Sy, plans to list its China malls or transfer them to real estate investment trusts, or Reits, within five years.

SM Investments chief financial officer Jose Sio said the listing of the China malls or the Reits could be done in Singapore or Hong Kong Stock Exchange, which offer better valuations.

Sio said the company was reviewing its investment strategy in China in preparation for the planned listing and possible expansion there.

He said the company might consider building two to three malls each year after 2010, instead of putting up just one.

“Next year we will review if we need to accelerate our expansion in China because China is exploding,” Sio said.

SM Investments, through its unit SM Prime Holdings Inc., operates malls Xiamen and Jinjiang in southern China, and Chengdu in the central part. Three more malls are in the pipeline, including which will be opened next year.

Sio said the company would consider listing or Reits when the number of malls in China reached eight.

Sio said the company was also considering adopting Reits for local shopping malls.

“If the law is passed, many local companies will be availing of the Reits and SM Prime will be one of them,” Sio said.

Reits allow companies to list their income-producing property assets, such as a mall or even highways, on the stock exchange. They provide an alternative method for a company to raise capital.

The proposed bill calls for the listing of the stocks in the stock exchange to enable the public to subscribe to them.

One of the attractions of the Reits is a tax incentive in which only 10 percent of the net taxable income will be subject to corporate income tax.

SM Prime registered a net profit of P3.4 billion in the first half of the year, up 8 percent from P3.2 billion year-on-year.