Megaworld’s REIT sets lower price for IPO

Megaworld’s REIT sets lower price for IPO

By Revin Mikhael D. Ochave, Reporter

MREIT, Inc. finalized the offer price of its initial public offering (IPO) at P16.10 per share, lower than the P22 ceiling it previously set.

MREIT President Kevin Andrew L. Tan said the company decided to put the price of the IPO at an “attractive level” to allow more upside for IPO investors looking to invest in the long-term.

“At this IPO price, MREIT will be offering investors an attractive dividend yield of 5.65%, to be distributed quarterly, and at the same time, we will be giving them exposure to high quality, fast-growing portfolio of assets,” he said in a statement on Friday.

In a listing notice, MREIT said that the offer will consist of 844,300,000 firm shares and up to 105,537,500 option shares. The company is the real estate investment trust (REIT) sponsored by Tan-led Megaworld Corp.

The offer, consisting of the firm and option shares, stands to raise a total of P15,292,383,750 in proceeds.

According to its preliminary prospectus dated Aug. 31, MREIT planned to offer 1,078,000,000 common shares with an overallotment option of up to 161,700,000 common shares at an offer price of P22 per share. It would have produced P27.3 billion in proceeds.

COL Financial Group, Inc. Chief Technical Analyst Juanis G. Barredo said in a mobile phone message that MREIT’s price of P16.10 offers a “decent” prospective dividend yield of 5.65% for June 2022 and 6.08% for June 2023.

“Although it is lower than Filinvest REIT Corp. and RL Commercial REIT, Inc., it does bring itself competitively closer to the average yield range of present REIT offerings,” Mr. Barredo said.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the decision of MREIT to make adjustments in its IPO will help entice more investors

in terms of providing more price upside and capital appreciation potential, on top of the dividend yield.

“Market conditions also partly weighed recently by the more contagious coronavirus disease 2019 (COVID-19) Delta variant that could potentially delay economic recovery prospects,” he said in a mobile phone message.

MREIT has 10 office assets in its initial portfolio with a total gross leasable area of 224,430 square meters, three of which are located in Eastwood City in Quezon City, five in Bonifacio Global City’s McKinley Hill, and two in Iloilo Business Park in Mandurriao, Iloilo City

Properties included in the company’s portfolio are 1800 Eastwood Avenue, 1880 Eastwood Avenue, E-Commerce Plaza, One World Square, Two World Square, Three World Square, 8/10 Upper McKinley, 18/20 Upper McKinley, One Techno Place, and Richmonde Tower, which houses Richmonde Hotel Iloilo.

Megaworld previously said it identified four additional office assets to be placed in MREIT in the next four years.

“MREIT, being Megaworld’s flagship REIT, is being structured to deliver fast growth and strong aftermarket performance. At the current issue size, the institutional tranche was close to 2x oversubscribed, which bodes well for aftermarket performance,” Mr. Tan said.

He said that Megaworld will be retaining a 62.5% stake immediately after the IPO in order to get more near-term and long-term valuation upsides for its shareholders.

He added that Megaworld will be receiving additional proceeds as it completes the impending cash injection of three buildings into MREIT, which is expected to be done by early 2022.

“The resulting total proceeds is what the sponsor (Megaworld) intended to raise to fund its 21 projects all over the country during the next 12 months,” Mr. Tan said.

The 21 projects consist of 15 office developments, five malls, and one hotel.

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