MREIT secures SEC approval for P27-billion Wave 5 asset deal

Insider Spotlight

• SEC approval clears MREIT’s largest asset acquisition to date, a P27-billion property-for-share swap.
• Wave 5 will add about 303,900 square meters of gross leasable area and diversify MREIT beyond offices.
• The assets will contribute to MREIT’s income retroactively from July 1, supporting dividend-per-share accretion. 
  
  
  

MREIT Inc. has secured Securities and Exchange Commission approval for its P27-billion Wave 5 property-for-share swap, paving the way for its biggest asset acquisition and lifting assets under management to about P122 billion upon completion.

Together with the P16.2-billion Wave 4 transaction completed in the first quarter, MREIT’s asset infusions this year will exceed P43 billion. Wave 5’s income contribution will take effect retroactively from July 1. 

Why it matters

The transaction substantially expands and diversifies MREIT’s portfolio. Wave 5 will add about 303,900 square meters of gross leasable area, bringing its total portfolio above 950,000 square meters.

MREIT, whose portfolio is currently more than 95 percent office by GLA, will emerge with a mix of about 77 percent office, 20 percent retail and 3 percent hotel. Its presence will also expand from five to nine Megaworld townships. 

What’s included

Wave 5 comprises five lifestyle malls — Festive Walk Mall, Lucky Chinatown Mall, Venice Grand Canal Mall, Eastwood Mall and Southwoods Mall — with combined GLA of about 160,200 square meters.

The portfolio also includes the 737-room Holiday Inn Express Manila Newport City and six office properties: Science Hub Tower 2, Venice Corporate Center, Six West Campus, One Paseo, Global One and Horizon Center. The assets have a blended occupancy rate of 91 percent and weighted average lease expiry of 5.3 years. 

By the numbers

The properties were valued at a blended effective cap rate of 7.8 percent. Shares for the transaction were priced at P16.50 each, an 18.6 percent premium to MREIT’s 30-day volume-weighted average price preceding board approval.

“Wave 5 demonstrates MREIT’s ability to translate the depth of Megaworld’s sponsor pipeline into tangible shareholder value. With SEC approval secured within the third quarter and the assets contributing income effective July 1, shareholders stand to benefit from the transaction’s material dividend-per-share accretion from the outset,” MREIT president and CEO Jose Arnulfo Batac said. 

What’s next

MREIT is preparing Wave 6, which is expected to consider select Megaworld properties in Uptown Bonifacio, subject to due diligence, valuation and corporate and regulatory approvals.

The company expects its portfolio to surpass its one-million-square-meter GLA target by 2027. 

— Edited by Daxim L. Lucas