Megaworld sells 10% of MREIT for P3.6B

MANILA  -Tycoon Andrew Tan’s Megworld Corp. is raising P3.63 billion through the sale of a sizeable stake in real estate investment trust subsidiary MREIT Inc. to a group of local and foreign institutional investors.

Megaworld struck a deal to sell 279 million common shares of MREIT, equivalent to a 10-percent stake, at P13 per share. This represents a 7-percent discount from the previous day’s closing price.

MREIT shares rose 0.71 percent to P14.10 per share on Friday.

The discounted shares were met with strong demand, prompting Megaworld to increase the offer by 10 percent from the original size of 254 million shares.

“At the MREIT level, we are pleased to have several institutional investors on board. This investment demonstrates confidence in MREIT’s potential as a strong and attractive long-term investment opportunity,” Kevin L. Tan, president and CEO of MREIT, said in a statement on Friday.

Domestic and international “long-only” funds and investors were the buyers of the MREIT shares, the company said. The deal was arranged by Swiss investment bank UBS AG.

Megaworld will remain MREITs’ controlling shareholder with a 55.6-percent stake once the deal is completed.

“[Megaworld] continues to be committed as a sponsor and the transaction increases MREIT’s free float which provides headroom for future acquisition of assets via property for share swap,” according to MREIT.

It said all proceeds will be used “to fund further development of high quality commercial assets, helping to build on its existing portfolio and thereby expanding the pipeline of potential acquisition opportunities for MREIT”.

Megaworld is raising funds to partly support a five-year P350-billion spending program to open new townships in Luzon, Visayas and Mindanao.

The developer is a pioneer in the urban township concept. It launched the 18.5-hectare Eastwood City in Quezon City in the mid 1990s. It has 30 such projects across the country as of last March.

For 2023 alone, Megaworld is allocating P55 billion in capital spending, which was up nearly 20 percent from the previous year.

MREIT earlier announced the signing of a memorandum of understanding to acquire seven grade A office assets from Megaworld. The offices have a total gross leasable area of 150,500 square meters, which will boos its portfolio by 46 percent. The assets are located in Megaworld’s township projects in McKinley Hill, McKinley West, Iloilo Business Park, and Davao Park District.