MREIT, Inc., the REIT company of township developer Megaworld, reported that its Board of Directors has approved the acquisition of four prime, grade A buildings located in PEZA-registered zones for a total of P9.1billion.
In a disclosure to the Philippine Stock Exchange, the firm said the transaction will increase MREIT’s property value by 19 percent to P58.5 billion.
The transaction will result in the infusion of Two Techno Place, Three Techno Place, and One Global Center, which are located in Iloilo Business Park; as well as World Finance Plaza in McKinley Hill in Fort Bonifacio, Taguig.
The four prime office properties have a combined GLA of 55,700 square meters, thus increasing MREIT’s portfolio GLA by 25 percent to around 280,000 square meters.
With an average occupancy rate of 99 percent, the infused assets will start contributing to MREIT’s revenues upon execution of the Deed of Absolute Sale before the year ends.
To fund the investment, MREIT’s Board also approved the closing of a 10-year term loan facility amounting to P7.25 billion with a local bank. To minimize volatility in interest costs, the loan will have a fixed rate.
Meanwhile, the remaining balance of the acquisition cost shall be paid using the company’s existing cash.
Upon full drawdown, MREIT’s total debt will translate to just 12 percent of its deposited properties versus the limit of 35 percent as provided by the REIT Law.
Should MREIT secure a credit rating from a duly accredited or internationally recognized rating agency, the limit goes up further to 70 percent.
“This transaction marks the beginning of our significant growth journey. We do not have any debt on our balance sheet at the moment, so we decided to lever up in order to take advantage of the current favorable interest rate environment and enhance our returns,” said MREIT President and CEO Kevin Andrew L. Tan.
He added that, “Consequently, the infusion of these prime assets will result in a 5.3 percent increase in our expected dividends for calendar year 2022 from P0.95 per share to P1.00 per share.”