Filinvest hinges success of REIT listing on buoyant BPO industry

Gotianun-led Filinvest Land Inc. (FLI) is anchoring the success of its new real estate investment trust (REIT), which it spun off from a portfolio of commercial assets, on an upbeat business process outsourcing (BPO) industry.

Prime multinational BPO companies accounted for 88.4 percent of the occupied gross leasable area (GLA) of a planned 17-building REIT portfolio as of March 31 while Philippine offshore gaming operator tenants occupied only 2.8 percent, FLI said in a press statement.

Non-BPO offices and retail tenants comprised the balance.

“REIT is a new financial platform to monetize our investment assets as they mature and provide funding to fuel future growth. The fair market value of all our investment projects both existing and under construction is P190 billion based on the appraisals of third parties,” said FLI president and CEO Josephine Gotianun-Yap.

REIT portfolio

Cyberzone Properties Inc. (CPI), a subsidiary of FLI, has filed a registration statement with the Securities and Exchange Commission (SEC) to establish itself as a commercial REIT. This is the third REIT to apply for public listing after Ayala Land-led AREIT and DoubleDragon Properties Corp.’s DDMP REIT.

FLI plans to offer up to 1.63 billion secondary common shares in CPI, which will be renamed Filinvest REIT Corp., for as much as P8.30 per share. About 163.42 million additional shares will be up for sale as part of an overallotment option.

CPI is one of the pioneer BPO office space providers in the country. Its REIT portfolio consists of 16 office towers, one of which has a retail component, in Northgate Cyberzone in Filinvest City, Alabang. CPI also owns one office tower with a retail component in Cebu City.

Filinvest REIT is landlord to 301,362 square meters of leasable space. Total property assets are valued at P36.99 billion, based on the prospectus submitted to the SEC.

Except for one tower, the office buildings in the portfolio are located in the 18.7-hectare Northgate Cyberzone, one of the first Philippine Economic Zone Authority (Peza)-accredited IT parks in the Philippines. The remaining office tower with a retail component is located in Cebu Cyberzone, also a Peza-registered economic zone located in the gateway to Cebu IT Park, Lahug, Cebu City.

Pioneers

FLI is one of the pioneers in providing offices to the BPO sector. The latter ensures a steady cash flow for the group amid the COVID-19 pandemic.

Based on Filinvest REIT’s pro-forma financial statement for 2020, it posted P1.61 billion in net income out of P2.78 billion in revenues. Return on equity was at 30.1 percent.

REIT, a relatively new asset class in the local market, refers to a corporation that primarily invests in income-generating real estate such as office spaces, shopping malls, service apartments, hotels, hospitals and warehouses. It gives investors an opportunity to invest directly in the finished projects rather than in the developer itself.

This asset class is meant to attract dividend-seeking investors. The REIT law requires the distribution of at least 90 percent of income as dividends annually.

For a REIT sponsor like FLI, this new asset class allows the property developer to recycle capital for further property development and expansion initiatives. INQ