MREIT, INC. is moving forward with the subsequent phase of its portfolio diversification after its board approved a P27-billion property-for-share swap that may add retail, hotel, and office assets to its portfolio.
In an announcement on Monday, the true estate investment trust (REIT) of Megaworld Corp. said the transaction, which stays subject to Securities and Exchange Commission (SEC) approval, marks its fifth asset infusion.
Once accomplished, MREIT’s assets under management (AUM) will increase to P122 billion.
“As we scale, we remain focused on driving cost efficiencies across the portfolio. This provides a transparent path to margin improvement and, in turn, dividend-per-share accretion for shareholders. MREIT’s next phase of growth is about constructing a bigger, more diversified platform that drives long-term value for shareholders,” MREIT President and Chief Executive Officer Jose Arnulfo Batac said.
The transaction is predicted so as to add about 303,500 square meters (sq.m.) of gross leasable area (GLA), increasing MREIT’s portfolio to greater than 950,000 sq.m. It follows the corporate’s P16.2-billion fourth wave of acquisitions accomplished in the primary quarter.
The newest asset infusion may also put MREIT heading in the right direction to achieve 1 million sq.m. of GLA ahead of its 2027 goal.
Upon completion of the transaction, office properties will account for about 77% of MREIT’s GLA, down from greater than 95% currently.
Retail assets will comprise about 20% of the portfolio, while hotel properties will account for the remaining 3%.
The transaction may also expand MREIT’s footprint from five to nine Megaworld townships.
The retail component comprises five malls with a combined GLA of 160,200 sq.m., representing 53% of the assets being infused.
These are Festive Walk Mall in Iloilo Business Park, Lucky Chinatown Mall in Binondo, Venice Grand Canal Mall in McKinley Hill, Eastwood Mall in Quezon City, and Southwoods Mall in Biñan, Laguna.
The transaction also includes the 737-room Holiday Inn Express Manila Newport City, which has 26,500 sq.m. of GLA and accounts for 9% of the asset infusion. The hotel is positioned in Newport City across from Ninoy Aquino International Airport Terminal 3.
The office component consists of six properties with a combined GLA of 117,200 sq.m., representing 38% of the transaction. These are Science Hub Tower 2 and Venice Corporate Center in McKinley Hill, Six West Campus in McKinley West, One Paseo in ArcoVia City, Global One in Eastwood City, and Horizon Center in Newport City.
The assets included within the fifth wave of acquisitions have a blended occupancy rate of 91% and a weighted average lease expiry of 5.3 years.
The transaction will likely be undertaken through a property-for-share swap involving Megaworld Corp., Travellers International Hotel Group, Inc., and Southwoods Mall, Inc. at a subscription price of P16.50 per share, corresponding to an 18.6% premium to MREIT’s 30-day volume-weighted average price. — Alexandria Grace C. Magno