BIZ BUZZ: Biggest REIT to get even bigger?

Megaworld Corp. created a lot of market excitement last week when it announced that it would launch the country’s largest offer of real estate investment trust (REIT) shares valued at an estimated P27.3 billion over the next few weeks.

That’s exciting because recent REITs offered by Philippine real estate firms have really been geared more toward local investors, given the sizes of their offerings. Two of the earliest ones and one upcoming one have total issue sizes in the P15-billion range.

Depending on market response, Megaworld’s will be almost twice the size of these earlier REITs. And this means it will be big enough for foreign investors to participate in (as many foreign fund managers usually plunk their money only into issues that are large and liquid).

For the uninitiated, REITs are a hot asset class nowadays because they give investors the option to invest directly in finished products that are already earning money, such as offices, hotels, shopping malls, dormitories, infrastructure ventures like toll roads and power plants.

Of course, undertaking a large initial public offering is also a double-edged sword as it usually means that it will take a lot more buying from the investing public to make its share price appreciate.

Megaworld chief strategy officer Kevin Tan—who is also the president of the newly formed firm that will offer the shares called MREIT—is confident that the issue will do well, thanks to long-term foreign asset managers who will likely buy into the issue, thereby locking in much of the shares and making it more exciting for retail investors who are looking for a quick punt.

He’s also confident about the REIT’s attractiveness to investors since the bulk of the assets Megaworld will be injecting in it will be office space currently leased out to business process outsourcing firms, which are known to provide very steady and reliable cash flows through regular and long-term rental income.

But there’s one more thing the Tan scion didn’t mention in his briefing for the media: Biz Buzz hears that Megaworld plans to add more assets to the REIT they’re selling in the not-so-distant future to make it more attractive for its prospective investors.

Word on the street is that, from the initial list of assets that Tan announced last week, this number could go up to 15—something that will provide an upside to buyers who come in today. In that sense, the country’s biggest REIT already promises to become even bigger before it’s officially launched. Not a bad deal, assuming that the gossip is true. Is it? Abangan!

—Daxim L. Lucas

Takeover target?

In the last few weeks, Ever-Gotesco Resources and Holdings Inc. has seen extraordinary trading in the stock market on speculation that this long-struggling company could be a merger and acquisition (M&A) target.

The names of three conglomerates floated in the market recently, one of which is a big group that had bought some shopping mall assets from this group in the past, while another is a group whose principal stockholders are in-laws of one scion of Ever. The third rumored white knight is a group with interests in agriculture that is said to be hatching a joint venture deal. Once a high-flying mall developer that had been dragged into the financial woes of the defunct Orient Commercial Banking Corp., Ever is likewise owned by the group of businessman Jose Go.

This was a bank failure attributed by banking regulators to mismanagement, with billions of pesos of loans diverted to directors, officers, stockholders and related interests that were in turn said to have funded real estate investments.

To date, Ever is facing legal issues as it had been impleaded in 2000 to the civil case between Bangko Sentral ng Pilipinas (BSP) and the defunct bank. Ever had been fighting garnishment proceedings since then. But there is at least one case which it had been able to resolve through a compromise agreement with a creditor.

But whoever is taking over the company (if any) still has a lot of cleaning up to do. As of last year, its deficit amounted to P4.6 billion, while current liabilities exceeded current assets by P1 billion.

As to whether the M&A play is real or concocted by pundits, the market should find out soon enough.

—Doris Dumlao-Abadilla

Veggie nuggets

Encouraged by the robust market reception to its plant-based burger aka “Goood Burger,” leading full-service restaurant chain Shakey’s Pizza Asia Ventures Inc. has again teamed up with sister firm Century Pacific Food Inc. to launch plant-based nuggets dubbed “The Goood Nuggets.”

Shakey’s swears that the new nuggets under the “unMeat” brand “look, taste and feel like chicken nuggets but are completely meat-free.” These nuggets (priced at P179 per order) are baked, not fried, and are loaded with plant-based protein, which the company asserts, make them healthier and friendlier to the environment.

“Our Goood Nuggets are very consistent with our Goood Burger, which serves as a healthy meat alternative made with non-GMO plant-based ingredients, with no cholesterol and transfat content, while remaining a good source of protein and fiber,” said Shakey’s president and chief executive officer Vicente Gregorio.

Shakey’s is the first major restaurant chain in the Philippines to create a plant-based range that makes meat- alternative dishes affordable and accessible to a broader segment of the population.

The launch of The Goood menu is seen as part and parcel of Shakey’s sustainability strategy.

—Doris Dumlao-Abadilla INQ

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