Megaworld-backed MREIT trims price, size of planned offering

MANILA, Philippines — MREIT Inc., the real estate investment trusts (REIT) company of Megaworld Corp., reduced the price and size of its upcoming maiden share sale in a bid to attract demand for what was once thought to be the biggest initial public offering of a REIT firm in the country.

In a listing notice on Friday, MREIT announced it would sell 844.3 million common shares at a price of P16.10 apiece. If there’s robust investor demand, the Megaworld-backed REIT firm has an option to sell 105.5 million more common shares.

Including the overallotment option, MREIT is expected to rake in P15.3 billion in gross proceeds.

That said, MREIT will proceed with its IPO with a smaller offer than what it had originally planned. Initially, the company was hoping to sell 1.1 billion shares — with an overallotment option of 161.7 million shares — at a price of P22 each. That would have generated up to P27.3 billion in gross proceeds, the biggest REIT offer so far.  

April Lee Tan, research head at COL Financial, believes the original offer plan might not have been attractive to investors.

“The yield based on its max offer price is very low relative to FILRT (Filinvest REIT Corp.) and RCR (RL Commercial REIT Inc.). As such, given the size of its original offer, there might not have been enough demand,” Tan said in a Viber message, referring to MREIT’s rivals backed by landlords Filinvest Land Inc. and Robinsons Land Corp.

“The lower price might result to stronger investor demand for the REIT as the yield will be higher and more attractive,” Tan added.

As a publicly-owned listed company, REIT is tasked to use proceeds from share sale to purchase and manage income-generating property assets such as malls, offices and warehouses. At least 90% of income from these ventures are required to be declared as dividends with shareholders.

MREIT’s portfolio consists of 10 office, retail and hotel assets with an aggregate gross leasable area of 224,430.80 square meters. These are located in three prime townships of Megaworld - Eastwood City in Quezon City, McKinley Hill in Taguig City, and Iloilo Business Park in Mandurriao, Iloilo City.

MREIT’s parent will receive all the proceeds from the share sale. The offer period will happen on September 14 to 20, while the listing date is set on September 30.

As of 12 p.m. on Friday, shares in Megaworld were trading up 1.34%, outperforming the main index.