MEGAWORLD Corp. is putting 10 of its key office assets into a real estate investment trust (REIT) that is aiming to sell up to P27.3-billion worth of shares in an initial public offering (IPO).
According to a prospectus filed with the Securities and Exchange Commission (SEC) on Wednesday, MREIT, Inc. is planning to offer secondary shares of up to 1.239 billion common shares at a maximum price of P22 per share.
“We are going to launch the largest REIT in the country. This will be the largest IPO of a REIT. We are launching a total asset size of about P55.6 billion for 10 properties. The size of the offering will be around P27.3 billion (including overallotment),” Kevin Andrew L. Tan, Megaworld chief strategy officer and MREIT president, told reporters on Wednesday.
The offer shares represent 49% of the company’s total issued outstanding capital stock, assuming the overallotment option is fully exercised. Megaworld will retain the remaining 51%.
Through a property-for-share swap, Megaworld put in 10 office, retail and hotel assets with a combined gross leasable area of 224,430 square meters (sq.m.) into MREIT.
The buildings are located within Megaworld’s major townships — Eastwood City in Quezon City, McKinley Hill in Bonifacio Global City, and Iloilo Business Park in Mandurriao, Iloilo City.
Included in the 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.
Mr. Tan emphasized that they chose only the office buildings with “Tier 1” tenants, mostly business process outsourcing (BPO) companies. He noted these office buildings have around 95% occupancy, with most lease contracts between five to 10 years.
“We have carefully selected the properties that we will be putting in here. We selected them for the quality of the buildings… and for the diversity, which includes location… We only choose those with the best quality tenants, superior BPOs. No POGOs (Philippine offshore gaming operators),” Mr. Tan said.
While only 10 of Megaworld’s office assets are included in MREIT, the company has identified four more to be injected in the next four years.
“Today, it’s 10 properties but Megaworld has 70 buildings, we have 1.4 million sq.m. (in office space). What we’re launching in the REIT is only 224,000 sq.m. and every year Megaworld builds an average of 100,000 sq.m. a year. In the last two years, we slowed down a bit… but we will accelerate again next year,” Mr. Tan said.