MREIT, Inc. (stock: MREIT), the real estate investment trust arm of Megaworld Corporation (stock: MEG), has received approval from the Securities and Exchange Commission (SEC) to acquire six prime office buildings worth ₱13.15 billion through a property-for-share swap. This strategic acquisition will significantly increase MREIT’s gross leasable area (GLA) and is expected to boost revenue streams starting in the last quarter of 2024.
The properties involved in the deal include:
- Two West Campus, Ten West Campus, and One Le Grand in McKinley West, Taguig City
- One Fintech and Two Fintech at Iloilo Business Park
- Davao Finance Center in Davao City
These buildings are located in PEZA-registered zones, which offer tax incentives for business locators, making them highly attractive to office tenants. Combined, they add a total of 156,631 square meters to MREIT’s GLA, pushing its total office space to 482,055 square meters. This expansion represents a 48% increase in MREIT's leasable area.
MREIT will issue over 926 million primary shares to Megaworld Corporation at ₱14.20 per share as part of the property-for-share swap. This transaction will result in Megaworld’s ownership in MREIT increasing from 51.33% to 63.44%.
The acquisition was valued by third-party appraisers and was subjected to fairness opinions and internal reviews, ensuring that the deal is favorable to both MREIT and its shareholders. The infusion of these properties is set to enhance MREIT’s income streams immediately, as the newly acquired buildings will start contributing to the company’s revenues by the fourth quarter of 2024. This, in turn, is expected to boost the dividends distributed to shareholders.
MREIT’s CEO Kevin Tan emphasized that this acquisition is a crucial part of the company’s broader strategy to expand its portfolio and maintain its position as one of the leading REITs in the country. He stated, "These high-quality, income-generating assets will start contributing to MREIT’s income by the fourth quarter of this year, further enhancing value for our shareholders and ensuring sustained growth in dividends."
This move is in line with MREIT’s investment plan, which aims to reach 500,000 square meters of GLA by the end of 2024. MREIT has already built a diverse portfolio of 24 office buildings spread across major Megaworld townships, including Eastwood City, McKinley Hill, Iloilo Business Park, and Davao Park District.
By continually expanding its footprint in key business districts, MREIT is positioning itself for sustained growth in the volatile office leasing market. The acquisition not only provides immediate revenue but also reinforces the company’s long-term goal of becoming the largest office REIT in Southeast Asia.
The acquisition comes at a critical time for the office leasing sector, which has faced challenges due to the shift to remote work. However, the demand for quality office spaces in strategic locations, such as PEZA-registered zones, remains resilient. MREIT’s focus on acquiring Grade A office buildings in growth centers like Taguig, Iloilo, and Davao aligns with its strategy to remain competitive in the evolving office space market.
Despite the positive outlook from this acquisition, MREIT shares have seen slight declines, dropping 0.44% to ₱13.70 per share following the announcement. However, this movement likely reflects broader market trends rather than concerns over the transaction itself. Investors remain optimistic about the long-term value that the expanded portfolio will deliver.
With the SEC’s approval of this ₱13.15 billion property-for-share swap, MREIT has taken a major step towards its goal of becoming the dominant player in Southeast Asia’s office REIT market. The infusion of these prime assets is expected to immediately boost revenue, provide stable dividend growth, and further solidify MREIT’s position as a leading REIT in the Philippines.