Office space biz tempers virus impact on Megaworld bottom line

Tycoon Andrew Tan-led Megaworld Corp. saw a 45-percent drop in attributable net profit last year to P9.9 billion as the COVID-19 pandemic weighed down its residential development, shopping mall and hotel businesses.

The resilient office business, however, mitigated the overall impact of the pandemic as this segment delivered revenues of P10.4 billion, matching the level seen in 2019 when COVID-19 had yet to bring chaos to the global economy.

Despite all the mobility restrictions, Megaworld was able to close deals for new office leases last year. It announced 135,000 square meters of fresh office space inventory were leased out in the company’s townships in Iloilo, Quezon City, and Fort Bonifacio, 78 percent of which represented new leases for existing tenants while the rest had been taken up by new occupants.

Most stable

“At this point, we can say that 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 Tan said in a disclosure to the Philippine Stock Exchange on Wednesday.

Megaworld also inked lease renewals for around 145,000 square meters of office space from various tenants last year.

On the office supply side, Megaworld delivered around 87,000 square meters of fresh office space last year, bringing its total leasable office inventory to 1.4 million square meters. This excluded the office units up for sale in Iloilo Business Park and Maple Grove in Cavite.

In 2020, the company’s consolidated revenues fell by 35 percent to P43.5 billion. Full-year rental income slid by 23 percent to P12.9 billion, while real estate sales declined by 42 percent to P24.9 billion.

‘Remarkable recovery’

Despite the effects of the pandemic on the tourism and hospitality industry, Megaworld Hotels booked P1.5 billion in revenues last year.

On a sequential basis, however, Megaworld reported signs of “remarkable recovery” in its core businesses in the fourth quarter, particularly in the shopping mall, hotel and residential businesses as quarantine measures were eased.

Megaworld’s real estate sales grew by 22 percent in the fourth quarter compared to the third quarter last year, while reservation sales went up by 85 percent quarter-on-quarter. The shopping mall and hotel revenues also improved by 24 percent and 25 percent in the fourth quarter from the previous quarter.

On the residential business, the company brought to the market P7.8 billion worth of new inventory last year.

Article and Photo originally posted by Inquirer last April 15, 2021 5:16am and written by Doris Dumlao-Abadilla.