By Keren Concepcion G. Valmonte, Reporter
HAVING an attractive dividend yield will continue to lure investors to real estate investment trust (REIT) listings despite cautious sentiment amid uncertainty brought by the coronavirus disease 2019 (COVID-19) pandemic, analysts said.
MREIT, Inc., the REIT sponsored by Megaworld Corp., said its final offer will comprise 844.30 million common shares and an overallotment option of up to 105.54 million shares. This is down from its initial plan to offer 1.08 billion shares with an overallotment of up to 161.7 million shares.
“The reduction of offer shares tells us that the demand for these office leasing REITs may have started to decline. The last four REIT listings that happened over the span of 12 months [have] given the market all the exposure that it wants in this sector,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in a text message on Friday.
Ayala-led AREIT, Inc. is the Philippine Stock Exchange’s (PSE) first REIT listing, which made its market debut in August last year. DoubleDragon Properties Corp.’s DDMPR, Inc. led this year’s offers in March, followed by Filinvest Land, Inc.’s Filinvest REIT Corp. last month.
Meanwhile, the REIT unit sponsored by Robinsons Land Corp., RL Commercial REIT, Inc., is slated to list on the PSE on Tuesday, Sept. 14.
“Investors may want to see how [MREIT] performs in the next few quarters before increasing their positions in this area, since the assets between the REITs are similar and do not have any major advantages against the other,” Mr. Mangun said.
Meanwhile, MREIT also set its final initial public offering (IPO) price to P16.10 apiece, 27% lower than the P22 each maximum offer price it set on its prospectus.
“Given the current state of the economy as well as the uncertainty over how the COVID-19 pandemic will unfold in the coming months, the IPO’s final offer price may encourage more investors to participate in the offer given the higher dividend yield,” Timson Securities, Inc. Trader Darren Blaine T. Pangan said in a Viber message on Saturday.
MREIT President Kevin Andrew L. Tan said in an e-mailed statement on Friday that its IPO was priced “to provide more upside to IPO investors,” who were dubbed as the company’s “long-term partners.”
Its projected dividend yield is at 5.65% for 2022 and is said to be around 6.1% for 2023.
“Recall that this may potentially be higher according to MREIT’s management as occupancy as of August was already at 100%,” Papa Securities Corp. Equities Strategist Manny P. Cruz said in a text message on Friday.
“Our view is that the offering is attractive given the yield that is slightly higher than AREIT [at] 5.4%,” he added.
Timson Securities’ Mr. Pangan said MREIT currently offers “much more attractive yields,” while AAA Southeast Equities’ Mr. Mangun said it may “potentially become the highest-paying REIT on the PSE.”
“However, these projections are solely based on their prospectus as no earnings reports for fiscal year 2022, which just started last July 1, 2021, have been reported,” Mr. Mangun added.
MREIT may raise up to P15.29 billion in proceeds, should the overallotment option be exercised. This will be used to fund the development of 21 Megaworld projects across 11 of its townships in the country within the next 12 months. This includes 15 office developments, five lifestyle malls, and one hotel.
“[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,” Mr. Tan said.
MREIT was said to have attracted strong demand from institutional investors both here and abroad.
“At the current issue size, the institutional tranche was close to two times oversubscribed, which bodes well for aftermarket performance,” MREIT’s Mr. Tan said.
“Local demand [is] expected to build up further as retail [investors are] waiting for final price,” BDO Capital & Investment Corp. President Eduardo V. Francisco said in a text message on Friday.
Post-IPO, Megaworld will have a 62.5% stake “to capture more near-term and long-term valuation upsides” as its REIT unit continues to grow along with the country’s REIT industry.
“MREIT expects both its market cap and float to grow over time as it successfully executes on its aggressive growth trajectory,” Mr. Tan said.