Andrew Tan-led township developer Megaworld Corp. has raised an additional ₱3.38 billion from the sale of shares in MREIT Inc. as it prepares for the next wave of asset infusions into its real estate investment trust (REIT).

In a disclosure to the Philippine Stock Exchange (PSE) on Wednesday, June 10, the firm said it sold 246.14 million MREIT common shares at ₱13.75 per share through a block sale transaction, with proceeds to be settled on Thursday, June 11.

AB Capital Securities, BDO Securities, and Maybank Securities acted as brokers for the transaction.

Based on PSE data and Megaworld’s previous sale of MREIT shares, MREIT’s public float stood at 38.83 percent of its outstanding capital of 4.72 billion shares.

The REIT needs to further increase its public float so it can issue more shares to sponsor Megaworld in exchange for assets to be infused without falling below the 33-percent minimum public ownership (MPO) requirement for REITs.

The shares sold in the block sale are equivalent to about 5.2 percent of MREIT’s outstanding shares and are expected to increase its public float to about 44.03 percent.

Last April 30, Megaworld raised ₱1.27 billion from the sale of 91.16 million MREIT shares at ₱13.90 per share through a block sale transaction equivalent to a 1.9-percent stake in the REIT.

The public float had declined from 46.82 percent following the completion of MREIT’s fourth wave of asset infusions worth ₱16 billion. Last March, Megaworld raised ₱945 million from the sale of 70 million MREIT shares, equivalent to 1.88 percent of the company, to increase the public float to 46.8 percent.

MREIT is looking to acquire about ₱25 billion worth of 12 mall, office, and hotel assets from Megaworld, Travellers International Hotel Group Inc., and Southwoods Mall Inc.

The firm has signed a memorandum of understanding (MOU) with its sponsor and affiliated companies for the acquisition of commercial assets with a combined gross leasable area (GLA) of approximately 303,500 square meters (sqm).

To support the execution of Wave 5, MREIT’s board of directors has endorsed for stockholder approval at the company’s annual stockholders’ meeting (ASM) the issuance of up to 1.8 billion primary common shares to be used in property-for-share swaps.

At ₱13.75 per share, the proposed issuance is valued at ₱24.75 billion. The 1.8 billion shares will be equivalent to 27.6 percent of MREIT’s expanded capital.

The transaction marks the largest single asset acquisition in MREIT’s history and a defining step in its transition from a pure office REIT into a diversified Philippine REIT.

The acquisition would bring the company’s asset portfolio to nearly one million sqm of GLA, ahead of its previous target of reaching that level by 2027.

“Wave 5 is the biggest step in MREIT’s growth journey since our IPO [initial public offering]. This transaction transforms MREIT from an office REIT into a diversified REIT, anchored by some of the most iconic mall and lifestyle assets in the country. We are positioning MREIT for the next decade of compounding growth,” said MREIT Chairman Kevin L. Tan.

The Wave 5 portfolio consists of five lifestyle malls, six grade A office buildings, and one internationally branded hotel anchored by household names in Philippine retail and hospitality.

The mall assets, totaling around 160,000 sqm of GLA, include Eastwood Mall at Eastwood City in Quezon City; Venice Mall at McKinley Hill in Taguig City; Lucky Chinatown Mall in Manila’s Binondo district; Festive Walk Mall at Iloilo Business Park in Iloilo City; and Southwoods Mall at Southwoods City in Biñan City, Laguna province.

Office assets, totaling around 117,000 sqm of GLA, include Science Hub Tower 2 and Venice Corporate Center at McKinley Hill; Six West Campus at McKinley West in Taguig; One Paseo at ArcoVia City in Pasig City; Global One at Eastwood City; and Horizon Center at Newport City in Pasay City.

The hospitality asset is the 26,500-sqm Holiday Inn Express Manila at Newport City, MREIT’s first internationally branded hotel.

Once finalized and approved, the acquisition will expand MREIT’s total portfolio by 47 percent from 647,000 sqm to approximately 950,000 sqm.

This is expected to further shift MREIT’s asset mix from more than 95-percent office at present to a diversified composition of approximately 77-percent office, 20-percent retail, and three-percent hospitality.