The Philippines’ largest office lessor Megaworld Corporation is planning to raise up to 27.3 billion pesos (US$567 million) through a real estate investment trust (Reit) offering as this funding vehicle continues to gain traction among the country’s leading property developers.
The company’s subsidiary MREIT on June 16 submitted its registration statement with the Philippine Securities and Exchange Commission to launch a Reit initial public offering. Subject to regulatory approvals and market conditions, MREIT plans to offer secondary shares of up to 1.24 billion shares at an offer price of up to 22 pesos per share.
The proposed offer is expected to raise gross proceeds of up 27.3 billion pesos, assuming full exercise of the overallotment option, which would be the biggest Reit offering in the Philippines to date. This would represent up to 49% of the total issued and outstanding shares of MREIT.
Through a property-for-share swap, Megaworld injected into MREIT a portfolio of 10 office, retail and hotel assets with an aggregate gross leasable area of 224,430.80 sq m, located in the company’s three prime townships – Eastwood City in Quezon City, McKinley Hill in Taguig City and Iloilo Business Park in Iloilo City. The properties in these three townships are currently home to around 200,000 business process outsourcing (BPO) and other office workers, according to MREIT president and CEO Kevin Andrew Tan.
BDO Capital & Investment Corporation, Credit Suisse, UBS and DBS were mandated as joint global coordinators for the IPO, with BDO Capital acting as the domestic lead underwriter.
To date, Megaworld has the largest portfolio of leasable office spaces in the Philippines, with around 1.4-million sq m of office properties in 10 major cities across the country, according to Leechiu Property Consultants. It also holds the largest office leasable properties in the entire Bonifacio Global City, the country’s fastest-growing business district today.
Megaworld registered 10.4 billion pesos in office rental revenues in 2020, making it the ‘most stable’ income generator for the company amid the Covid-19 pandemic. The company intends to reinvest the Reit net proceeds in 16 projects all over the country.
Two Reits are so far listed on the Philippines Stock Exchange (PSE) with the Ayala Land-sponsored AREIT debuting in August 2020 after raising 12.3 billion pesos. It was followed by DDMP REIT sponsored by DoubleDragon Properties Corporation, which commenced trading in March this year following a 14.7 billion pesos IPO.
Another property developer, Filinvest Land Inc, also a pioneer provider of office space to the BPO sector, has likewise made a filing to the PSE of its intention to launch its own Reit this year.