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BIZ BUZZ: Sustainability-themed REIT

/ 04:02 AM June 16, 2021

It’s not the first real estate investment trust (REIT) to recycle capital via the local stock exchange, as the curtain-raising title has gone to Ayala Land’s AREIT Inc. It’s not even the second REIT as DoubleDragon’s DDMP REIT became the runner-up.

However, Gotianun-led Filinvest REIT Corp., which has applied for an initial public offering (IPO) worth as much as P14.9 billion, seeks to differentiate itself by becoming the first sustainability-themed REIT in this part of the world.

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As such, Filinvest chief Josephine Gotianun-Yap said in an Economic Journalists Association of the Philippines forum yesterday that she was hoping that Filinvest REIT, with the help of underwriters UBS and BPI Capital, could attract sustainability-focused funds as anchor or cornerstone investors.

She noted that Filinvest City, where 16 buildings out of Filinvest REIT’s 17 buildings are located, was the first central business district in the country to bag the (Leadership in Energy and Environmental Design) LEED v4 gold for neighborhood development certification. This CBD also has an “eco-loop,” the Philippines’ first integrated, electric-powered 24/7 public transport system. Office buildings within its Northgate Cyberzone are served by the country’s largest district cooling system, reducing carbon emissions and energy consumption.

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The 17th property in the portfolio is an office tower with a retail component in Cebu Cyberzone. All in all, the 17-building REIT portfolio has a total gross leasable area (GLA) of 301,362 square meters.

Like AREIT, Filinvest REIT—which has 88.4 percent of its GLA devoted to business process outsourcing locators—does not own the land on which the skyscrapers stand, but these are secured by 75-year lease agreements, Gotianun-Yap noted. At the height of the current pandemic, she noted that there were still some e-payment and European business process outsourcing (BPO) firms signing up leasing deals for their expansion programs, suggesting the resilience of the BPO sector.

As to dividends, Gotianun-Yap assured the public that Filinvest REIT’s policy would be competitive relative to existing REITs that yield around 5 percent a year. She added that Filinvest REIT was keen on declaring 100 percent of earnings as dividends versus the 90-percent minimum required by the REIT Law.

As Filinvest REIT will be the group’s financial platform for commercial assets, we can expect this REIT to gobble up even more assets under the group.

“In addition to the initial portfolio, we have another 315,000 square meters of office portfolio that will be infused when it has attained the investment criteria of the REIT guidelines,” Gotianun-Yap said. “In addition to that, we have many many other assets like retail (property) under construction as well as industrial warehousing.”

With over 400 hectares of landbank in prime CBDs, including Clark and Cebu, she said this REIT would have more room to grow in the future.

As the group is required to reinvest REIT IPO proceeds within a year, she said among the criteria was that a prospective investment would have to be a grade A commercial property—whether office or opportunistic assets in the shopping mall or hospitality segments. For office assets, they would have to cater to prime BPO multinational clients and would have to be well-located. Strong growth and accessibility to the workforce are likewise among the key criteria.

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—Doris Dumlao-Abadilla

Speaking of which …

Not a lot of people know that Cyberzone Properties Inc., a subsidiary of Filinvest Land Inc., was born out of the Gotianun family’s Silicon Valley dreams.

When the family took annual treks to California in the 1990s, they saw the vast residential and commercial real estate landscape in Silicon Valley. The Gotianuns even foresaw that the business process outsourcing (BPO) trend would one day arrive in the Philippines. This inspired the family to build a world-class purpose-built office complex that will house BPOs and technology companies, just like in Silicon Valley.

This California dream is now known as Northgate Cyberzone, an 18.7-hectare Philippine Economic Zone Authority Special Economic Zone in Filinvest City in Alabang that was home to one of the earliest BPO campuses in the country.

“Northgate was patterned after the sprawling campus offices of many startups and global technology firms,” FLI president Josephine Gotianun-Yap said. “From my trips, I saw the large floor plate and side core office buildings, which we introduced to the Philippines and has since become the industry standard.”

One of the first built-to-suit commercial properties in the Philippines was completed in Northgate Cyberzone in 2004 with a 7,000-square-meter space for a multinational global BPO firm. Another BTS commercial property was completed the following year with 18,000 square meters of space, the largest BTS commercial property at the time, for a global BPO of a multinational bank.

Northgate Cyberzone is also why Filinvest takes great pride in being a pioneer and having one of the longest track records in leasing office spaces to BPOs. Gotianun-Yap even hired a Silicon Valley-based architect for the first office building in Northgate Cyberzone.

Thanks to Gotianun-Yap’s foresight, the strategy has so far served FLI well. Amid the COVID-19 global pandemic, Cyberzone Properties’ revenues still rose 7 percent to P3.1 billion in 2020 versus the previous year, thanks to the resilience of the country’s information technology-BPO sector. In the last decade, revenues from this market segment have steadily given CPI a steady cash flow.

The question now is … will investors view the company’s upcoming REIT issue with the same foresight as that of its owners? We’ll know soon enough. Abangan!

—Daxim L. Lucas

Ride-sharing and politics

Ride-sharing companies have learned that operating in the Philippines, like most other markets, requires good political clout to survive.

The usual solution was to hire a talented lobbyist or government relations officer—we leave the rest up to the imagination.

The more practical route, of course, is to simply join the government.

We understand a founder of one of the ride-sharing companies operating here is, in fact, mulling such a possibility with the 2022 elections drawing near.

No, this isn’t to transform the industry as the next president but something more achievable, such as the party list system. That path would also avoid the need to have anyone riding in tandem, so to speak.

This potential candidate does have a powerful transport advocacy on his side. His company also has the backing of millions of commuters and some clever tongue-in-cheek marketing skills—assets that have helped it overcome past instances of hostile government intervention and will be useful tools in a campaign.

Such a bid remains a possible scenario at the moment and more clarity should emerge in the coming months with the approaching deadline for the filing of candidacy. Until then, we can just say … abangan!

—Miguel R. Camus INQ

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