MREIT to add P20B in new office space to portfolio

Newly listed MREIT Inc. is set to gobble up about P20 billion worth of additional office property assets in the coming months, jacking up the portfolio value of the Megaworld Group-sponsored real estate investment trust (REIT) to P78.5 billion by year-end.

The 34-percent increase in portfolio value of MREIT will come from the infusion of properties from various Megaworld townships across the country.

In terms of footprint, MREIT aims to build a portfolio with gross leasable area (GLA) of 500,000 square meters by 2024 and increase this further to 1 million sq m before the end of the decade.

“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,” Kevin Tan, president and CEO of MREIT, said in a disclosure to the Philippine Stock Exchange on Thursday.

“These new properties have a multinational tenant base, which include large financial, health care, technology and consulting firms. 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,” he added.

Latest transaction

In December last year, MREIT completed the acquisition of four commercial properties with a GLA of 55,700 sq m for a sum of P9.1 billion.

As of end-2021, MREIT’s expanded portfolio comprised 14 prime grade A buildings with a total GLA of around 280,000 sq m located in Philippine Economic Zone Authority-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. We are very optimistic of our very long growth runway considering that Megaworld is building more offices and even launched new townships last year,” said Tan.

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

Currently, MREIT’s debt stock stood at just about 12 percent of total deposited properties, well below the 35 percent mandated by the REIT Law. Portfolio value of assets is currently at P58.5 billion.

“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 said.

With the support of its sponsor, Megaworld—the largest office landlord in the country—MREIT aspires to be one of the largest REITs in Southeast Asia.