MREIT’s asset value to jump by 19% to P58.5-B after Megaworld asset infusionJanuary 19, 2022
The Board of Directors of MREIT, Inc., the REIT company of township developer Megaworld, has approved the acquisition of four prime, grade A buildings located in PEZA-registered zones for a total consideration of P9.1-billion. The transaction will increase MREIT’s property value by 19% 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% to around 280,000 square meters. With an average occupancy rate of 99%, 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% of its deposited properties vs. the limit of 35% 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%.
“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. Consequently, the infusion of these prime assets will result in a 5.3% increase in our expected dividends for calendar year 2022 from P0.95 per share to P1.00 per share,” says MREIT President and CEO Kevin Andrew L. Tan.
Megaworld is currently the market leader in office developments having completed over 1.4 million square meters of office spaces and an extensive pipeline of new office projects in place. With the strong backing of its sponsor, MREIT promises to be the Philippines’ fastest-growing office REIT and will have the longest runway of growth. The company aims to have a total portfolio GLA of 500,000 square meters by 2024 and will grow this further to 1,000,000 square meters before the end of the decade, which will make it one of the largest office REITs in Southeast Asia.
At present, MREIT’s portfolio is composed of ten (10) prime, grade-A office assets with GLA of 224,431 square meters. These properties are located in Megaworld’s Eastwood City, McKinley Hill, and IloIlo Business Park townships.