MREIT signs MOU to acquire 7 new office towers
MREIT [MREIT 14.00 1.4%; 2% avgVol] [link] signed a memorandum of understanding with its parent company, Megaworld [MEG 1.99 2.5%; 511% avgVol], to possibly acquire seven “grade A office assets” with a combined gross leasable area (GLA) of 150,000 square meters.
MREIT said that the assets in question, located in Taguig, Iloilo, and Davao, generated approximately P1.2 billion in rental income last year and have a combined occupancy rate of 94%. MREIT said that it hopes to sign definitive agreements for the translation in Q3 of this year. The injection would increase MREIT’s GLA by 46%.
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MREIT pulled up short of mentioning the deal’s total value, but we can very loosely estimate the value by using the smaller deal that MREIT completed earlier this year as a guide.
With that transaction, MREIT closed on 44,567 GLA of office space in Taguig and Iloilo for P5.3 billion, which is about P119,000/sqm. Here, if we multiply that value by the 150,500 GLA that MREIT estimates for this package, we end up with a value of P17.9 billion.
According to my data, MREIT has about P13.4 billion of “buying power” between its available equity (P1.1 billion) and debt (P12.3 billion). Unless MREIT is able to consider the properties to be acquired as part of its deposited properties, and then use that additional debt quota to buy the assets, it would seem as though MREIT is going to have to do some kind of equity raise to increase its public float to remain about the 33.33% public float minimum threshold.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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