SEC approves MREIT's stock-for-asset swap with Megaworld

The Securities and Exchange Commission has approved the P5.3 billion acquisition of four prime office properties in McKinley West and Iloilo Business Park by MREIT, Inc., the real estate investment trust of township developer Megaworld Corporation.
In a disclosure to the Philippine Stock Exchange, MREIT said the new acquisitions from its sponsor Megaworld will have a total gross leasable area (GLA) of 44,567 square meters.
This will increase MREIT’s asset portfolio to 18 office properties in four Megaworld premier townships with GLA expanding by 16 percent to 325,000 square meters from the current portfolio of 280,000 square meters.
These properties include Festive Walk 1B and Two Global Center in Iloilo Business Park, as well as One West Campus and Five West Campus in McKinley West, Taguig City.
As of the end 2022, the four prime, grade A office properties have an occupancy rate of 96 percent, significantly above the industry level of between 80 percent to 81 percent.
The properties will be exchanged for 263.7 million primary common shares at P20.00 per share and represents a 41 percent premium over MREIT’s current price of P14.20 per share on March 24, 2023. This was approved by the RPT committee and Board last year, based on appraisal reports and third-party fairness opinion.
The properties to be infused are dividend accretive, meaning that the properties are expected to increase MREIT’s dividend payments to its shareholder.
“The SEC approval of our property-for-share acquisition results in the recognition of income from the new assets by MREIT from January 1, 2023, which will help drive our growth,” said MREIT President and CEO Kevin L. Tan.
He noted that, “The high occupancy rate of these buildings is a clear proof of the quality of our assets and their strategic locations. The new office assets from McKinley West now command one of the highest rental rates in the Greater Manila Area, supported by the high demand for office space in this area.”
“We’re committed to grow our portfolio size by 54 percent to 500,000 square meters by 2024. This will help us achieve our goal of delivering at least 10 percent annual total shareholder return as we are now looking forward to the next phase of MREIT’s growth,” added Tan.