Megaworld’s REIT firm bullish on expansion prospects, BPO growth

MREIT Inc., owned by billionaire Andrew Tan’s Megaworld, is planning to grow its office asset size to 1 million square meters within the next five to 10 years as it aims to be the country’s fastest growing REIT company with the longest expansion pipeline among listed REITs on the Philippine Stock Exchange.

Next year, Megaworld plans to inject an additional 100,000 square meters of prime office assets that will increase MREIT’s portfolio to around 324,000 square meters by end of 2022.

“We are committed to reaching half a million square meters by 2024, and are highly confident of our ability to reach 1 million square meters in the near future so that we can be the largest office REIT in Southeast Asia. Our goal is to put the Philippines and MREIT on the global REIT map because of the size and quality of our REIT portfolio and our world class tenant base,” MREIT president and chief executive officer Kevin Tan said in a statement Monday, Sept. 13.

Tan expressed optimism that they can easily achieve this because Megaworld already has 1.2mm square meters of existing office buildings and has a robust pipeline of new office development spread across major business parks across the country.

“We remain bullish about the prospects of the Philippine BPO sector and Megaworld expects to maintain its undisputed leadership position as the Philippine office landlord of choice for the world’s leading IT and BPO companies” Tan said.

MREITs initial portfolio of approximately 224,431 square meters consists of 10 prime office buildings in three of Megaworld’s most established township locations that are popular amongst the biggest BPO companies operating in the Philippines.

Throughout the years, the firm’s integrated live-work-play townships have proven to be successful in attracting better and stickier tenants, which in turn translates to significantly less tenant churn, consistently higher occupancy rates and sustainable escalating rental rates, according to Tan.

MREIT’s initial public offering (IPO) price was set at P16.10 per share, which translates to a projected 2022 dividend yield of 5.7 percent.

The estimated net IPO proceeds of P14.7 billion together with the expected cash proceeds from the impending asset injection into MREIT by its sponsor will be reinvested over the next 12 months by Megaworld into 15 projects with retail components in Metro Manila, Bacolod, Cebu, Davao, Iloilo, and Pampanga, five malls located within Bacolod, Cavite, Pampanga, and Rizal, and one hotel, located in Cebu.

“We only see this as the beginning of a very long growth runway. We thank investors for their trust and confidence in supporting our IPO. We are excited about the opportunity to grow and create value for our Sponsor, our investors and for the country,” Tan said.

REIT or real estate investment trust refers to a company established for the purpose of owning income-generating real estate assets that can provide a return to investors from rental income. (CSL with PR)