Stock Commentary

Megaworld raises P500-M selling block of MREIT at P12.30/share

Merkado Barkada
Megaworld raises P500-M selling block of MREIT at P12.30/share

Megaworld [MEG 1.74 unch; 65% avgVol] [link] disclosed that it sold 40,650,000 shares of its REIT subsidiary, MREIT [MREIT 12.84, up 0.3%; 7% avgVol], through a block sale transaction at a price of P12.30/share. The deal raised P500 million for MEG, and it pushed an additional 1.45% of MREIT’s outstanding shares into the public float. Once the agreement is settled next week, MREIT’s public float will rise to 44.87%.

MB bottom-line: This block sale move has quickly caught on as the preferred method for gaining the public float needed to facilitate an asset-for-shares swap. AREIT [AREIT 34.20, down 1.8%; 66% avgVol] started it around a year ago, and since then we’ve seen Citicore Energy REIT [CREIT 2.77, down 0.4%; 53% avgVol], RL Commercial REIT [RCR 5.03, up 0.2%; 93% avgVol], and now MREIT do it this way instead of going through the whole process of a follow-on offering or a stock rights offering. We don’t know for sure if this is MEG just needing a quick little boost of cash, or if it’s MEG setting the table for a swap, but there’s nothing wrong with it being a blend of the two. At yesterday’s closing price of P12.84, this gives MEG and MREIT about P12 billion in potential swap value that it could offer to acquire new assets from MEG.



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