MREIT to diversify to retail spaces this year
MREIT Inc., the real estate investment trust of Megaworld Corporation is seeking to diversify its portfolio to include retail spaces as part of its aim to expand its assets to one million square meters of gross leasable area by 2030.
“We will begin to acquire retail assets from our sponsor, capitalizing on the strong rebound in tenant sales, rental rates and occupancy rates at Megaworld Lifestyle Malls,” said MREIT President and CEO Kevin L. Tan during the firm's annual stockholders' meeting.
He added that “by 2030, we plan to further diversify our portfolio by exploring new property sites available to our sponsor, ensuring every sustainable growth and cementing our position as one of the market leaders.”
“MREIT is actively looking to diversify its assets beyond the office sector starting this year and we plan to inject also retail assets. This strategic move provides shareholders with exposure to the strong performance of the retail sector and enhancing the company's overall resilience and growth prospects,” said Tan.
He added that “in the long term. We're also studying other property types within the Megaworld portfolio that will bring value to MREIT. Broadening our investment horizon into new asset types will ensure MREIT will have a balanced and diversified portfolio that can withstand various market (challenges).”
MREIT announced recently that it is acquiring six office properties with a total value of P13.15 billion to increase its portfolio by 48 percent or 157,000 square meters to 482,000 sqm.
To be acquired from its sponsor Megaworld are the Ten West Campus, and One Le Grand in McKinley West; One Fintech and Two Fintech in Iloilo Business Park; and Davao Finance Center in Davao Park District.
The properties will be exchanged for 926.16 million MREIT secondary shares at P14.20 per share, representing a premium of 10 percent over MREIT’s closing price of P12.94 per share on May 10, 2024.
MREIT said the purchase price of the properties is based on appraisal reports and validated by a third-party fairness opinion, which were presented to and approved by the company’s RPT Committee and Board of Directors.
“The acquisition of these properties moves us closer to our target portfolio of 500,000 sqm by the end of 2024,” said Tan.
He added that “this transaction not only supports the sustained growth of MREIT but is also dividend accretive to our shareholders."
“We are immediately working on the next set of acquisitions to reach our target assets under management before the year concludes,” he also said.
To date, MREIT’s portfolio covers 18 office properties located in four Megaworld premier townships: Eastwood City, McKinley Hill, Iloilo Business Park, and McKinley West.