MREIT cuts IPO size, price

Megaworld Corp., the real estate firm led by businessman Andrew Tan, has slashed the price and the number of shares which will be sold to the public by its real estate investment trust firm MREIT Inc.

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.

At the said amount and offer size, MREIT will raise as much as P15.29 billion from the initial public offering (IPO), lower than the P25.71 billion from the previous size.

The Gokongwei Group’s RL Commercial Reit Inc. also slashed its price to P6.45 per share from its indicative price of P7.31 apiece, but it retained its offering at 3.34 billion common shares and the over-allotment option of 305.1 million common shares. It raised some P23.5 billion, which will be listed on the Philippine Stock Exchange within the week.

“If we exercised full option, it would have still been oversubscribed 1.5 times. At this current size we are two times,” Kevin Andrew L. Tan in a statement. Tan was referring to the demand from institutional investors.

“The company has decided to price the deal at an attractive level to provide more upside to IPO investors who will be its long-term partners in this new journey. At this IPO price, MREIT will be offering investors an attractive dividend yield of 5.65 percent, to be distributed quarterly, and at the same time, we will be giving them exposure to high quality, fast-growing portfolio of assets.”

Immediately after the IPO, Megaworld will retain a 62.5-percent stake in the company to capture more near term and long term valuation upsides for its shareholders as MREIT grows its portfolio with the maturation of the overall REIT industry in the Philippines, Tan said.

Megaworld will be receiving more proceeds once it completes the impending cash injection of three buildings into MREIT, which is slated to be completed by early 2022, he said.

“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,” he said. “MREIT expects both its market cap and float to grow over time as it successfully executes on its aggressive growth trajectory.”

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