Megaworld Corp. is set to make a Php 27.3 billion REIT offering later this year, which will be the largest real estate investment trust (REIT) initial public offering (IPO) in the country to date.
Megaworld’s REIT (MREIT) will offer as much as 1.2 billion worth of common shares at up to Php22 per share. These figures, if the company is given full exercise of the over-allotment option, will equate to up to 49 percent of the total outstanding shares of MREIT.
The real estate company plans to invest the proceeds from the offering towards 16 projects spread throughout the Philippines, with a portfolio that encompasses 10 hotel, retail, and office building assets with a combined gross leasable area of 224,430.90 square meters.
“Our REIT includes properties in three of our most sought-after premier township developments of Eastwood City, McKinley Hill, and Iloilo Business Park, which are home to around 200,000 BPO and other office workers today,” said Kevin Andrew Tan, MREIT President and CEO, in a report by GMA Network.
He added, “Our tried-and-tested signature concept of the township has attracted over 200 BPO and multinational companies to locate with us through the years since we started our first-ever Eastwood Cyberpark in 1999.”
Included in the REIT portfolio are One Techno Place, 1880 Eastwood Avenue, One World Square, E-commerce Plaza, 8/10 Upper McKinley, and Richmonde Tower.
BDO Capital & Investment Corp. (BDO Capital), UBS AG Singapore Branch, Credit Suisse (Singapore) Ltd., and DBS Bank Ltd. will serve as the IPO’s joint global coordinators, with BDO Capital assigned as the domestic lead underwriter, as mandated by MREIT.
Investing in REIT
As Megaworld enters the real estate investment market, this is a great opportunity for investors to consider taking advantage of the opportunity to jump into the enterprise as well.
Any company that owns and manages profit-generating real estate assets are considered REIT companies. Offices, hotels, apartments, warehouses, infrastructure, and shopping centers are among the assets that companies can possess to be considered a REIT company.
Purchasing a REIT is one form of investing in the real estate sector, with the other being physical properties. There are advantages and disadvantages to either option, and choosing the right type is extremely important to ensure profitable gains.
REITs typically require less capital than physical properties. The minimum starting capital for REIT-eligible stockbrokers in the Philippines is Php 5,000. Property companies oversee the management of REITs, which means investors don’t need to spend for and organize repairs, contractor hiring, and marketing.
Investors who purchase REITs earn money through dividends. Companies involved with REIT are required to pay at least 90 percent of their distributable annual income as dividends to their shareholders. Overseas Filipino workers who invest also have the opportunity to receive tax-free dividends for six more years.
Liquidity is another aspect that investors need to consider. REITs are quite liquid because they’re similar to publicly traded stocks, which can be sold quickly. However, there’s a drawback to this feature of REITs, since it makes them slightly volatile as prices of shares dip when interest rates rise, particularly during times of political instability and economic decline.
Megaworld’s bright and green future
Megaworld currently has over 1.4 million square meters of office spaces in 10 cities throughout the Philippines, as reported by Inquirer.net. The company mainly manages the leasing of retail and office spaces, real estate sales of residential developments, and supervision of hotel operations.
Among its subsidiaries are Eastwood Cyber One Corp., Richmonde Hotel Group International Ltd., Empire East Land Holdings Inc., Suntrust Properties Inc., Global-Estate Resorts Inc., and Bonifacio West Development Corp.
Megaworld is also at the forefront of sustainable development, with over 19 green buildings, 70 green real estate projects, and over 1,500 hectares of forest lands under its guardianship.
As sustainability is quickly becoming the norm for real estate projects, Megaworld’s early involvement in the movement spells a bright financial future for them. These features, coupled with their dominant place in the real estate market, make investing in their REIT worthwhile.