MREIT [MREIT 12.80, down 1.2%; 380% avgVol] [link] announced that it has applied to the SEC to approve a property-for-share swap transaction with its parent company, Megaworld [MEG 1.79, up 0.6%; 136% avgVol], where MREIT will acquire six “Grade A buildings” from MEG in exchange for 926,162,000 primary MREIT shares. The transaction is valued at P13.15 billion (~P14.20/share). The properties that MEG will inject into MREIT are One Fintech Place and Two Fintech Place in Iloilo Business Park, Davao Finance Center in Davao Park District, and Two West Campus, Ten West Campus, and One Le Grand in Fort Bonifacio. The transaction will increase MREIT’s gross leasable area (GLA) by 48% to 482,000 square meters.
MB bottom-line: This property-for-share swap structure is how the framers of the REIT Law imagined REITs would grow. I’ve seen some comments talking about how the issuance of primary shares by MREIT to MEG dilutes MREIT shareholders; this is true from a voting perspective, but not from a dividend or yield perspective. Starting from the point when the SEC approves the transaction, MREIT will begin generating revenue from these properties, and that revenue will flow into the dividends that MREIT will declare in future quarters. According to my calculations with the PSE’s data, this swap would push MREIT’s public float below the REIT Law’s one-third minimum public ownership threshold to 32.29%, so perhaps MEG will look to sell a small batch of shares in a private placement to prevent the possibility of suspension. Who knows when the SEC will approve the transaction? All I know is that it’s not a good look to get caught flat-footed by a surprise approval, like what happened to Leandro Leviste back when he still owned SP New Energy [SPNEC 1.13, down 0.9%; 45% avgVol]. I’m interested to see how MREIT will react to the shifting fundamentals of the office market. Anyone here tried GPT-4o? Things are changing at a rapid pace. A year ago we were laughing at having text translated into Jar-Jar speak. Today, I had a full 10-minute conversation with GPT-4o (“Sky”) about how to use Google Looker to produce a financial dashboard using my Google Sheets data.
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Citicore Renewable Energy Corporation [CREC 3.88 pre-IPO] [link] pushed its IPO back one week to June 7, with a revised offer period between May 27 and May 31. This is the second time that CREC’s IPO has been rescheduled. CREC was originally intended to list in March, but the listing was pushed back to the end of May after sticky in flation prevented central banks from lowering rates. CREC raised P5 billion from its sale shares in its subsidiary, Citicore Renewable Energy REIT [CREIT 2.85, up 0.7%; 107% avgVol], to SM Investments [SM 887.00, up 0.2%; 163% avgVol] back on March 31. The offer is 1.786 billion common primary shares at a maximum price of P3.88/share. Together with the overallotment option, the total IPO is worth up to P7.97 billion.
MB bottom-line: I don’t have any insider information about why the IPO was delayed a second time. I know that the PSE is usually hesitant to schedule IPOs too closely together for fears of oversaturating the market with new equity issuances, and given how heavy the OceanaGold PH [OGP 12.36, down 1.1%; 31% avgVol] listing has been so far, perhaps the PSE and CREC together decided that it might be worth it to get a little (more) space between OGP and CREC’s listing just to be sure. Edgar Saavedra’s group has been clear the whole time of its intent to list CREC in Q2, so a reschedule by one week to June 7 doesn’t seem like anything other than a bit of fine-tuning. Not sure how deeply we can read into anything. Just excited to get a look at a new IPO.
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Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.
Merkado Barkada’s opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.