TYCOON HENRY SY’S SM PRIME Holdings Inc., developer and operator of the country’s largest shopping mall chain, plans to offer as much as $500 million worth of real estate investment trusts (REIT) in the second semester to boost funds for expansion.

Top SM Prime officials also announced in a press briefing after the company’s stockholders meeting Tuesday that the firm’s net profit in the first quarter grew by 10 percent to P1.9 billion over a year ago.

The company is “bullish” on its prospects for the rest of the year, SM Prime president Hans Sy said.

“We are encouraged by the auspicious start of 2010. We will more vigorously pursue our expansion plans which support our overall positive sentiment with regards to the economy and consumer spending,” he said.

SM Prime also announced that its board had approved the formation of a REIT company to be able to offer these innovative instruments in the second semester, taking advantage of a new law that allowed the introduction of these instruments in the Philippine market.

Sy said the plan to tap the REIT—an instrument that gives investors the option to invest directly in the finished product instead of the property developer itself—could be a “significant and beneficial” way of transforming the company’s business model.

“It will potentially allow us to create a capital-efficient, asset-owning vehicle and acquisition platform to drive our growth and expansion while minimizing borrowing activities and related costs,” Sy said.

“With a REIT structure in place, we believe that SM Prime would be well positioned to show the potential value of its assets, which have appreciated tremendously over the years, as a result of operational efficiency, proper maintenance, expansion and introduction of new features and concepts into our existing malls,” he said. Doris C. Dumlao