MREIT to buy P20-B office assets from Megaworld

Published January 27, 2022, 4:09 PM

by James A. Loyola

MREIT, Inc., the real estate investment trust of township developer Megaworld Corporation, is set to acquire additional office assets worth around P20 billion this year.

In a disclosure to the Philippine Stock Exchange, the MREIT said this acquisition will eventually increase its portfolio value by 34 percent from the current P58.5 billion to P78.5 billion by end-2022.

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These properties will be acquired from parent company Megaworld from among its Megaworld townships across the country.

“MREIT is looking to surpass its target for 2022 in terms of asset injection. These new assets may include some of our ‘built-to-suit’ properties, which are considered superior in both quality and lease tenure,” said MREIT President and CEO Kevin L. Tan.

He noted that, “These new properties have a multinational tenant base, which include large financial, healthcare, technology, and consulting firms.”

MREIT Inc. President & CEO Kevin L. Tan

“We earlier announced an additional 44,300 square meters by end of the year, but we are working to further bulk it up with more assets as we continuously look for ways to increase dividend yields for our shareholders,” Tan said.

In December last year, MREIT completed the acquisition of four commercial properties with a total gross leasable area (GLA) of 55,700 square meters at the cost of P9.1-billion.

By the end of 2021, MREIT’s expanded portfolio already consisted of 14 prime, grade A buildings with a total GLA of around 280,000 square meters located in PEZA-accredited zones in the sponsor’s townships of Eastwood City, McKinley Hill, and Iloilo Business Park.

“We believe that the current business conditions are conducive to the attainment of our growth plans. We are currently looking at several properties for potential acquisition, not just in these three townships but also in two more new Megaworld townships,” said Tan.

Megaworld’s REIT vehicle looking to surpass 2022 asset injection target

He added that, “We are very optimistic of our very long growth runway considering that Megaworld is building more offices and even launched new townships last year.”

The various properties will be infused throughout the year with funding expected to come primarily from equity and potentially some debt.

Currently, MREIT’s percentage of debt versus total Deposited Properties is at around 12 percent, well below the 35 percent cap set in the REIT Law.

“There are still a number of items that we have to finalize, and as everyone knows, we have to go through the process as set under the REIT Law. But our objective for the year is to deliver on this enhanced investment plan and ensure the sustained growth of the company,” Tan explained.

With the support of its sponsor Megaworld, which is acknowledged as the country’s largest office landlord, MREIT aspires to be one of the largest REITs in Southeast Asia.

Looking forward, MREIT aims to have a portfolio GLA of 500,000 square meters by 2024 and increase this further to 1-million square meters before the end of the decade.

 
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