MREIT, Inc. is acquiring four “prime, grade A buildings” registered in economic zones for P9.12 billion, the company said in a statement on Thursday.
MREIT is the real estate investment trust (REIT) sponsored by Megaworld Corp.
MREIT’s board of directors has approved to acquire four assets that will increase its property value by 19% to P58.5 billion.
“This transaction marks the beginning of our significant growth journey,” MREIT President and Chief Executive Officer Kevin Andrew L. Tan said.
“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,” he added.
MREIT will infuse Iloilo Business Park buildings Two Techno Place, Three Techno Place, and One Global Center into its portfolio, along with World Finance Plaza located in McKinley Hill at Fort Bonifacio in Taguig City. The buildings have an average occupancy rate of 99%, the company said.
The four assets have a total of 55,700 square meters (sq.m.). It will boost MREIT’s gross leasable area (GLA) by 25% to nearly 280,000 sq.m. from 224,431 sq.m.
It will form part of MREIT’s current portfolio with 10 Grade A office assets, located in Megaworld’s Eastwood City, McKinley Hill, and Iloilo Business Park townships.
MREIT’s board of directors also approved to close a 10-year loan worth P7.25 billion with fixed rates to fund the acquisition. The balance will be paid using the company’s cash.
“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,” Mr. Tan said.
MREIT said its total debt will be at 12% of its deposited properties upon full drawdown, still below the 35% limit under 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%,” the company said.
MREIT said the four new assets will start contributing to revenues once the deed of absolute sale comes into effect before the year ends. According to Megaworld’s regulatory filing on Thursday, it expects the document to be executed on or before Dec. 29.
Shares of MREIT on Thursday declined 0.11% or two centavos to close at P18.32 apiece. — Keren Concepcion G. Valmonte