Offsetting POGO vacuum

The real estate investment trust (REIT) trend is now the major driver of the equities market and has been fueling the current bull run.

Megaworld REIT obtained regulator’s approval for the infusion of 6 prime offices, boosting their portfolio by 48 percent, to end up at 482,000 square meters (sqm) inching closer to its 500,000 sqm goal by the end of the year. MREIT is looking at issuing 926.16 million shares at a price of P14.20 which values the transaction at P13.15 billion.

This would put MEG’s ownership in MREIT to 63.44 percent from 51.33 percent. According to management, these assets would start contributing to MREIT’s earnings by the fourth quarter.

Megaworld is going heavy on retail assets for MREIT to offset the effects of the POGO retreat and benefit the company’s earnings substantially on the back of improving outlooks for consumption amidst moderating inflation. The eventual pick-up in consumer demand should translate to higher occupancy in malls.

Vacancies resulting from the exit of Philippine Offshore Gaming Operators (POGOs), alongside downsizing from BPOs following the emergence of work from home and hybrid work set-ups could result in overall market vacancy breaching 20 percent.

Despite a cautious outlook on the office segment, analysts still see this infusion as a step in the right direction in the sense that it would still result in dividend accretion.