MREIT gears up for largest asset acquisition

MANILA, Philippines — MREIT Inc., the real estate investment trust company of property giant Megaworld Corp., is gearing up for its largest single-asset acquisition to date, diversifying its portfolio through the infusion of mall and hospitality assets.

MREIT has signed a memorandum of understanding (MOU) to acquire 12 commercial assets with a combined gross leasable area (GLA) of approximately 303,500 square meters.

The transaction, which will be infused under the company’s Wave 5 expansion, consists of five lifestyle malls, six Grade A office buildings and one internationally branded hotel.

This will bring the company’s asset portfolio to almost one million square meters of GLA.

Through the MOU, MREIT, Megaworld, Travellers International Hotel Group Inc. and Southwoods Mall Inc. formalized their intent to proceed with the property-for-share swap, subject to due diligence, final valuation and the necessary regulatory approvals.

MREIT chairman Kevin Tan said Wave 5 expansion is the biggest step in the company’s growth journey since its initial public offering  (IPO) in 2021. 

“This transaction transforms MREIT from an office REIT into a diversified REIT, anchored by some of the most iconic mall and lifestyle assets in the country. We are positioning MREIT for the next decade of compounding growth,” Tan said.

MREIT has almost tripled its portfolio from 224,000 square meters to 647,000 square meters through four prior infusion waves since its IPO.

Once finalized and approved, the acquisition will expand MREIT’s total portfolio by 47 percent to approximately 950,000 square meters. 

It will also shift MREIT’s asset mix from over 95 percent office at present to a diversified split of about 77 percent office, 20 percent retail and three percent hospitality.

The mall assets, totaling around 160,000 square meters of GLA, include Eastwood Mall at Eastwood City in Quezon City; Venice Mall at McKinley Hill in Taguig; Lucky Chinatown Mall in Binondo, Manila; Festive Walk Mall at Iloilo Business Park in Iloilo City and Southwoods Mall at Southwoods City in Biñan, Laguna.

Office assets, totaling around 117,000 square meters of GLA, include Science Hub Tower 2 and Venice Corporate Center at McKinley Hill; Six West Campus at McKinley West, Taguig; One Paseo at ArcoVia City in Pasig; Global One in Eastwood City and Horizon Center in Newport City, Pasay.

The hospitality asset to be infused is the Holiday Inn Express Manila in Newport City, a 26,500-square-meter property, MREIT’s first internationally branded hotel.

MREIT said the introduction of retail and hospitality assets, structured under lease arrangements consistent with REIT investment criteria, is expected to broaden the company’s income base and enhance the resilience of its distributable income across cycles.

The company said Wave 5 is being structured to follow the same disciplined framework as its Wave 4 infusion, designed to minimize dilution and translate directly into higher dividends per share for existing shareholders.

“We have built our pipeline around discipline and accretion. Wave 4 demonstrated that our property-for-share structure can deliver immediate dividend accretion to existing shareholders, and our first quarter numbers already showed that flowing through to a record quarterly dividend,” MREIT president and CEO Jose Arnulfo Batac said.

“Wave 5 is being structured to repeat that outcome at a substantially larger scale, with a more diverse asset pool,” he said.

To support the execution of Wave 5, MREIT’s board of directors has endorsed the issuance of up to 1.8 billion primary common shares for use in property-for-share swaps. 

MREIT said its team would work alongside the counterparties over the coming months to complete due diligence and execute definitive agreements within the second half.