MREIT Inc., the real estate investment trust of Megaworld Corp., is set to diversify beyond office properties after its board approved a P27-billion asset infusion that seeks to add malls and a hotel to its portfolio as well as more office buildings.
The planned property-for-share swap, subject to approval by the Securities and Exchange Commission (SEC), will bring MREIT's assets under management to P122 billion from about P95 billion.
The transaction will also raise its gross leasable area (GLA) to over 950,000 square meters, nudging MREIT closer to its goal of a GLA of one million square meters by 2027.
The planned swap marks Megaworld’s fifth asset infusion into MREIT and, at P27 billion, will be the largest by value among Philippine listed real estate investment trusts this year, the company said.
The asset infusion will involve 303,900 square meters of GLA comprising five retail malls, one hotel and six office properties located across Megaworld townships.
Upon completion, MREIT's portfolio mix will shift from more than 95 percent office space by GLA to about 77 percent office, 20 percent retail and three percent hotel.
"MREIT's next phase of growth is about building a larger, more diversified platform that drives long-term value for shareholders," MREIT President and CEO Jose Arnulfo Batac said.
"As we scale, we remain focused on driving cost efficiencies across the portfolio. This provides a clear path to margin improvement and, in turn, dividend-per-share accretion for shareholders."
The retail assets include Festive Walk Mall in Iloilo Business Park, Lucky Chinatown Mall in Manila, Venice Grand Canal Mall in McKinley Hill, Eastwood Mall in Quezon City and Southwoods Mall in Biñan, Laguna.
Other assets for infusion include the 737-room Holiday Inn Express Manila Newport City, as well as six upscale office properties located in Taguig, Pasig, Quezon City and Pasay City.
The company said the Wave 5 assets had a blended occupancy rate of 91 percent and a weighted average lease expiry of 5.3 years.
The transaction will be carried out through a property-for-share swap with Megaworld, Travellers International Hotel Group Inc. and Southwoods Mall Inc. at a price of P16.50 per share, representing an 18.6-percent premium to MREIT’s 30-day volume-weighted average price.
Shares of MREIT on Monday dropped P0.06, or 0.43 percent, to P13.88 each while those of Megaworld were unchanged at P2.11 apiece.
