Real estate investment trust MREIT Inc. is banking on the continued growth of the information technology business process management (IT-BPM) industry in sustaining growth in its office space portfolio.
The company is also looking at folding into its pool of assets the retail spaces of mother company Megaworld Corp.
Kevin Tan, MREIT president, said as the IT-BPM sector taps into the local talents for its labor needs, the company will continue to see growth in its office space portfolio going forward.
“The BPO (business process outsourcing) industry remains stable and we think challenges, if any, are only temporary, based on our conversations with our customers. Market occupancy will likely stabilize and improve in the long term,” Tan said.
Tan said the growth of the IT-BPM industry will also help the company map out its expansion plans – areas that have an attractive long term growth potential and are situated in prime areas.
“This will include Megaworld’s prime township properties in and outside of Metro Manila,” he said.
MREIT meanwhile may take advantage of Megaworld’s retail space portfolio under Megaworld Lifestyle malls is diversifying its assets.
“The Megaworld lifestyle malls portfolio is definitely looking to be a very attractive diversification opportunity for him. We roughly have about 484,000 square meters of gross leasable area currently in the Megaworld lifestyle portfolio, which can be potentially injected into MREIT,” he said.
Tan said tenant sales at Megaworld Lifestyle malls have grown past pre-pandemic levels.
Megaworld and MREIT earlier announced a plan to infuse seven additional grade A office assets into the REIT unit.
The properties have a total gross leasable area of around 150,500 square meters (sq.m.) and generated P1.2 billion in rent last year.
MREIT said it has signed the memorandum of understanding (MOU) with Megaworld for the possible acquisition of the assets.
“These potential additions include Two West Campus (9,500 sq.m.) and Ten West Campus (36,400 sq.m.) in McKinley Hill, Science Hub Tower 3 (20,500 sq.m.) and Science Hub Tower 4 (20,700 sq.m.) in McKinley West, One Fintech Place (18,200 sq.m.) and Two Fintech Place (18,100 sq.m.) in Iloilo Business Park, and Davao Finance Center (27,100 sq.m.) in Davao Park District,” MREIT said.
“These properties boast high average occupancy rate of 94 percent and quality tenants, marking a significant step towards our commitment to deliver sustained growth and value to our investors. Over the coming weeks, our team will work alongside our sponsor Megaworld to conduct comprehensive financial, legal, and technical due diligence to ensure the viability of the assets with a goal to execute definite agreements within the third quarter of the year. We look forward to finalizing MREIT’s next set of acquisitions soon,” said Tan.
MREIT said the infusion of the new assets will grow its portfolio to 475,500 sq.m., up 46 percent from the current 325,000 sq.m., and bring it close to its target of 500,000 sq.m. of assets under management by end-2024.
To date, MREIT’s portfolio covers 18 office properties in four Megaworld mixed-use development.
Since its initial public offering in 2021, Megaworld has already injected eight office buildings into its portfolio and grew its value by 25 percent to P62 billion, following the two sets of previous acquisitions.
