SM Prime Holdings has shared that it is seriously looking at the option of putting in some of its Hong Kong based assets and properties under a Chinese Real Estate Investment Trust, a move with which the firm is looking to solidify its presence in the overseas market.

The REIT option is an alternative to an offshore public listing, but the company has not completely ruled that one out as yet.

As shared by Jose T. Sio, the Chief Financial Officer of SM Investments Corp, it would take at least 5 years for these plans to actually materialize, and will be put into action only after the firm has successfully managed to establish at least 8 to 10 malls across China.

‘The [company’s plan] in China is that once we get a good number of malls and the condition is still good, we can either do an initial public offering (IPO) or a REIT offering. In China, if you do an IPO or REIT, you can sell as high as 25 times of your capital. [Here in the Philippines,] it is only 14 or 15 times. So the upside potential in China is huge’, said Mr. Sio.

REIT is a ‘publicly listed corporation’ which invests into income generating real estate ventures like apartments and malls, and in June, the Chinese Government had shared that it is seriously considering REIT in the country to help real estate developers by giving them more financing channels.

The scheme originated in the US during the 1960s, and has gained much popularity in many world countries including Australia, Germany and Hong Kong.