MANILA, Philippines – SM Prime Holdings said it was dropping plans to raise up to $500 million via a real estate investment trust (REIT) offer after Manila issued new rules that mandate a minimum 40% public ownership in REITs.

The country’s biggest mall developer, a unit of conglomerate SM Investments Corp. owned by the Philippines’ richest man Henry Sy, had earlier picked CLSA and Macquarie as financial advisers for its planned REIT issue.

‘We don’t think we’ll avail of the structure given the minimum public ownership,’ SM Prime Chief Finance Officer Jeffrey Lim said in a briefing.

Last week, the government’s main tax agency issued rules on the creation of REITs, including a requirement of a 40% minimum public ownership for the first two years of the REIT’s listing, before increasing it to 67% in the third year.

The Philippine Stock Exchange and property developers have said the mandatory sale of such a significant interest in REITs would not be viable.

Most of the country’s property firms had been waiting for the release of the rules before finalizing plans for REIT offers.

The country’s top property developer Ayala Land Inc. said in May it could raise up to $400 million from a REIT listing.