MREIT Inc. is set to expand its portfolio after its board approved the infusion of nine Grade A office buildings in McKinley Hill, Taguig City, one of Metro Manila’s established business districts, from its sponsor Megaworld Corp.
MREIT told the stock exchange on Thursday that the transaction would be carried out through a property-for-share swap, with Megaworld subscribing to 996.87 million MREIT shares worth P16.2 billion in exchange for the nine office buildings, along with a cash payment of P187.5 million that MREIT received last Oct. 17 from its sponsor.
The transaction is still subject to confirmation of valuation by the Securities and Exchange Commission (SEC).
The assets for infusion comprise Science Hub Towers 1, 3 and 4; One Campus Place Buildings A and B; 8 Campus Place Buildings A, B and C; and South East Asian Campus (SEAC), all located in McKinley Hill, Taguig City, with several of the properties said to be LEED-certified.
The infusion will add 165,477 square meters (sqm) of gross leasable area (GLA) to MREIT’s portfolio, bringing its total office portfolio to 646,891 sqm upon completion of the deal.
MREIT noted that some of the buildings were occupied by multinational tenants, including Wells Fargo, which would support stable rental income.
“This latest infusion reflects MREIT’s continued focus on scaling up with high-quality, income-generating assets in prime locations,” said MREIT President and Chief Executive Officer Jose Arnulfo Batac.
Batac said the deal would also help ensure “stable and sustainable returns” to shareholders.
As part of the transaction, Megaworld will lease to MREIT the land on which the buildings stand for a period of 25 years, renewable upon mutual agreement, while existing leases with third-party tenants will also be assigned to MREIT, transferring the rights to collect rentals and assume related obligations.
Megaworld said it intended to treat the transaction as a tax-free exchange under Section 40(c)(2) of the National Internal Revenue Code, subject to regulatory approval.
MREIT plans another round of asset infusions in 2026, which may include select mall properties, as part of its goal to add another 750,000 sqm of GLA next year to reach its long-term target of 1 million sqm by 2027 as it diversifies beyond office assets.
MREIT shares on Thursday rose P0.12, or 0.86 percent, to close at P14.00 each, while those of Megaworld added two centavos, or 0.99 percent, to P2.04 apiece amid a 0.78-percent drop for the benchmark Philippine Stock Exchange index.
