MREIT Inc., the Megaworld Corp.-sponsored real estate investment trust, is planning to expand its office assets size to 1 million square meters within the next 5 to 10 years after the company decided to reduce the size and price of its initial public offering (IPO).
Next year, Megaworld is targeting to inject an additional 100,000 square meters of prime office assets into MREIT which will increase its portfolio to around 324,000 square meters by end-2022.
“We are committed to reaching half a million square meters by 2024, and are highly confident of our ability to reach one million square meters in the near future so that we can be the largest office REIT in Southeast Asia. Our goal is to put the Philippines and MREIT on the global REIT map because of the size and quality of our REIT portfolio and our world-class tenant base,” said Kevin Andrew L. Tan, MREIT president and CEO.
“We believe we can easily achieve this because Megaworld already has 1.2 million square meters of existing office buildings and has a robust pipeline of new office development spread across 26 business parks across the country. We remain bullish about the prospects of the Philippine BPO [business process outsourcing] sector and Megaworld expects to maintain its undisputed leadership position as the Philippine office landlord of choice for the world’s leading IT and BPO companies.”
MREIT’s initial portfolio, pegged at 224,431 square meters, consists of 10 prime office buildings in three of Megaworld’s most established township locations that are popular among the biggest BPO companies operating in the Philippines.
These include 1800 Eastwood Avenue, 1880 East Avenue, E-commerce Plaza, One World Square, Two World Square, Three World Square, 8/10 Upper McKinley Building, 18/20 Upper McKinley Building, One Techno Place Iloilo, Richmonde Tower and Richmonde Hotel Iloilo.
“Our current portfolio has been carefully curated to include only Grade A PEZA-accredited buildings with mainly BPO and multinational tenants. MREIT’s strategy is to be very focused on high quality office buildings with high quality tenants that are located inside an already established township,” Tan said.
MREIT’s initial public offering price was set at P16.10 per share, which translates to a projected fiscal year ending June 30, 2022 dividend yield of 5.7 percent.
The estimated net IPO proceeds of P14.7 billion, assuming full exercise of the over-allotment option, together with the expected cash proceeds from the impending asset injection into MREIT by Megaworld, will be reinvested by Megaworld in 15 projects over the next 12 months.
Megaworld will continue to own a stake of approximately 62.1 percent in MREIT after its IPO.
MREIT slashed the number of shares it will sell for its IPO and the price. The company said it will sell some 844.3 million in base offer shares, down from the previous 1.07 billion common shares, and an over-allotment option of 105.53 million shares, also down from the previously announced 161.7 million shares.
The final price of the said shares was placed at P16.10 apiece, or 27 percent lower than its earlier indicative price of up to P22 per share.