Megaworld income drops 45% despite stable off ice leasing

ANDREW L. Tan’s Megaworld Corp. reported a net income of P9.9 billion to parent firm equity holders for 2020, down by nearly 45% despite the uptick in the company’s office leasing business.

Revenues for the listed property developer slid to P43.5 billion, declining by 35% from P67.3 billion the previous year. Net income fell by 45% to P10.6 billion from P19.3 billion.

“Our office business is the most stable income generator in our company’s revenue stream with or without this health crisis, and we continue to focus on the expansion of this business in the years to come and further strengthen our leadership in the country’s office property sector,” Megaworld Chief Strategy Officer Kevin Andrew L. Tan said in a statement on Wednesday.

Megaworld Premier Offices posted P10.4 billion in revenues in 2020, inching down from P10.5 billion the previous year.

Some 135,000 square meters (sq.m.) of new office space inventory were rented out in the company’s Iloilo, Quezon City, and Fort Bonifacio townships. Around 145,000 sq.m. was also renewed by company tenants last year.

Megaworld said most of its renters are business process outsourcing companies, ecommerce firms, logistics companies, and finance institutions.

Existing office partners took up 78% of the new leases under Megaworld’s expansion programs. The rest were rented by new clients.

The company noted that office spaces in its Iloilo Business Park is one that piqued market interest.

“Approximately, 20% of new leases have been booked there and we even cemented our dominance in terms of market share in the Iloilo office market,” Mr. Tan said.

The company also completed the construction of an additional 87,000 sq.m. of office space, which includes the spaces being sold in Iloilo Business Park and Cavite’s Maple Grove. The construction bumped up Megaworld’s total leasable office inventory to 1.4 million sq.m. from 1.3 million sq.m.

In the last quarter of the year, the company reported that it saw recovery through Megaworld Lifestyle Malls, Megaworld Hotels, and its residential business as the government eased lockdown restrictions.

“Real estate sales grew 22% in the fourth quarter compared to the third quarter last year with reservation sales up 85% quarter on quarter, while Megaworld Lifestyle Malls and Megaworld Hotels also grew 24% and 25% quarter on quarter, respectively,” the company reported without disclosing specific figures.

Rental income declined to P12.9 billion, 23% lower than the P16.8 billion generated from a year ago. Meanwhile, real estate sales decreased by 42% to P24.9 billion from P42.6 billion.

Despite this, the company was able to launch new projects worth P7.8 billion, which includes those in The Upper East Bacolod, Iloilo Business Park, Capital Town Pampanga, and Hamptons Caliraya in Laguna.

Megaworld Hotels also reportedly generated P1.5 billion in 2020 despite the pandemic’s effects on the hospitality industry.

On Wednesday, shares of Megaworld at the exchange declined by 3.33% to finish at P3.48 from P3.60 each.