HomeForexMegaworld to launch three townships in Luzon

Megaworld to launch three townships in Luzon

By Keren Concepcion G. Valmonte, Reporter

MEGAWORLD Corp. is preparing to launch three townships within Luzon this year, its chief strategy officer and Alliance Global Group, Inc. (AGI) chief executive told BusinessWorld at the first installment of its Crisis Insights from Business Tycoons series.

“We want to expand, we are actually looking to launch at least three townships between now and next year in various parts of the Philippines, and then we are also very bullish about tourism even though right now, the situation is quite bleak,” said Kevin Andrew L. Tan, Megaworld chief strategy officer and AGI chief executive officer.

He reported that AGI unit Traveller’s International Hotel Group, Inc. saw a “record-breaking” VIP business amid the pandemic.

Meanwhile, Megaworld’s township concept became “ideal and quite compelling” amid the pandemic as it offered convenience to residents as well as for the office locators. Megaworld’s office buildings are located within these townships.

For Megaworld’s expansions across the country, it is banking on expectations that the business process outsourcing (BPO) industry will create more satellite offices in different areas.

Mr. Tan believes the group’s township concept can be a catalyst for economic development in other cities. He reported that every five square meters (sq.m.) of office space that Megaworld builds is equivalent to two BPO jobs.

“There’s [a] tremendous amount of opportunities to go out outside Metro Manila to the countryside and promote economic development there and we believe that our unique brand of townships enables us to do this, to create jobs,” Mr. Tan said.

AGI is also investing to support the BPO industry. Through Megaworld, it recently launched the Dr. Andrew L. Tan Data Science Institute (ALTDSI) with De La Salle University.

ALTDSI will offer programs and courses on data science to train more BPO professionals. It will be located within Megaworld’s 50-hectare McKinley Hill township development in Taguig City.

Megaworld is planning to get back to building 100,000 sq.m. of office spaces by next year, after slowing to building only 50,000 sq.m. because of the pandemic. It aims to have two million sq.m. in office spaces by 2030.

It currently has 1.2 million sq.m. of office spaces, 16% of which are infused into the initial portfolio of its real estate investment trust (REIT), MREIT, Inc.

“As we build more office spaces, we will also continue to inject mature office buildings into the REIT and that’s why MREIT will double its size in three years’ time and [will] probably hit a million sq.m. by 2027 to 2030,” said Mr. Tan, who is also the president and chief executive officer of MREIT.

Around 80% to 90% of the properties to be added to its REIT portfolio will cater to BPOs and tech firms, while its mixed-use developments will account for around 10% of the portfolio.

In a statement on Monday, MREIT said Megaworld will be adding 100,000 sq.m. of office assets to increase its portfolio by the end of next year to around 324,000 sq.m. from 224,431 sq.m.

“We are committed to reaching half a million square meters by 2024, and are highly confident of our ability to reach one million square meters in the near future so that we can be the largest office REIT in Southeast Asia,” Mr. Tan said.

MREIT is offering to the public 844,300,000 common shares for P16.10 each, with an overallotment option of up to 105,537,500 shares.

“This IPO (initial public offering) was priced at an attractive level to provide IPO investors a compelling entry opportunity to become long-term partners in MREIT’s goal of becoming the Philippines’ fastest-growing REIT backed by the country’s largest office landlord,” said BDO Capital & Investment Corp. President Eduardo V. Francisco.

MREIT’s offer period will run from Sept. 14 until Sept. 20, while it aims to make its debut at the Philippine Stock Exchange by Sept. 30.

Should the overallotment option be exercised, the offer may raise up to P14.7 billion along with the expected asset injection of Megaworld.

Megaworld will have a post-IPO stake of 62.1% in MREIT. It will use the proceeds to invest in 15 projects within the next 12 months.

MREIT’s initial portfolio consists of 10 office assets in its township developments.

“Our current portfolio has been carefully curated to include only Grade A PEZA-accredited buildings with mainly BPO and multinational tenants,” Mr. Tan said.

The buildings in its portfolio include 1800 Eastwood Avenue, 1880 East Avenue, and E-commerce Plaza in Eastwood City; 8/10 Upper McKinley, 18/20 Upper McKinley, One World Square, Two World Square, and Three World Square in its McKinley Hill development in Fort Bonifacio; and One Techno Place, Richmonde Tower and Richmonde Hotel Iloilo in Iloilo Business Park.

“Throughout the years, our integrated live-work-play townships [have] proven to be successful in attracting better and stickier tenants, which in turn translates to significantly less tenant churn, consistently higher occupancy rates, and sustainable escalating rental rates,” Mr. Tan said.

On Monday, shares of listed Megaworld at the stock exchange went down by 1.67% or five centavos to close at P2.95 each. Its parent AGI also declined by 0.37% or four centavos to finish at P10.66.

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