1 month ago
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Filinvest REIT Corporation (FILRT), the real estate investment trust of the Gotianun Group, expects the Festival Mall alone will boost its profits by 30 percent and increase its dividend payout once the property-for-share swap with its sponsor Filinvest Land Inc. is completed.
In a disclosure to the Philippine Stock Exchange, FILRT said the acquisition of the mall will expand its portfolio by an additional 121,862 square meters (sqm.), thereby increasing its gross leasable area (GLA) by 37 percent to 452,310 sqm.
This likewise will improve occupancy from 83 percent to 88 percent and extend the weighted average lease expiry (WALE) from 7.3 to 14.6 years.
The transaction will allow FILRT to diversify its income sources by integrating retail mall properties into its portfolio. Prior to the infusion, 91 percent of the GLA of FILRT are office buildings.
Post infusion, the portfolio mix of FILRT will be 67 percent offices, six percent hospitality (Crimson Boracay lot), and 27 percent retail (Festival Mall-Main Mall).
“The infusion of income-generating retail mall assets is expected to result in an increase in FILRT's distributable income.
“The mall can potentially increase the EBITDA of FILRT by at least 30 percent per quarter versus the third quarter 2024 EBITDA as disclosed. This, in turn, translates to higher dividends per share (DPS) for FILRT shareholders with DPS growth of 5.65 percent.” FILRT said.
It added that, “With the anticipated growth in income and dividends, the Transaction creates opportunities for share price improvement.”
The issuance of new shares in exchange for the property will increase FLI’s equity in FILRT from 51.06 percent to 63.27 percent while the public float level of FILRT will decrease from 46.68 percent to 35.03 percent.
In an earlier disclosure to the Philippine Stock Exchange, FLI said it is selling the 26 year-old Festival Mall to FILRT in exchange for 1.63 billion FILRT shares at an issue price of P3.85 per share worth a total of P6.26 billion under a tax-free property-for-share swap transaction.
It added that, upon the Securities and Exchange Commission’s approval of the transaction, FLI and FILRT shall execute a lease agreement for the Property.
In a separate disclosure, FILRT said the issue price is a 30 percent premium over the 30-day volume weighted average price of P2.94 per FILRT share.
FILRT’s diversification into mall leasing comes after its expansion into the hospitality space with the acquisition of 2.9 hectares of land owned by Filinvest Development Corporation (FDC) in Boracay island for P1.05 billion in cash.
The land is being leased by Boracay Seascapes, Inc. (BSI), the building owner of Crimson Resort & Spa Boracay and a subsidiary of FDC.
FILRT President and CEO Maricel Brion-Lirio said in November last year that Filinvest REIT aims to double its portfolio over the next three years through asset infusion from the Filinvest Group as well as through acquisitions.
“These are grade A office buildings, retail assets under the Filinvest malls and township portfolio and hotels under the Crimson and West brands in key tourist destinations of the country.
“We are also open to infusions of commercial assets from third parties outside of the Filinvest Group granted it will pass assessment and investment criteria in closing,” she said.
