FLI REIT sets IPO price at P7/share; higher dividend yield expected

Gotianun-led real estate investment trust (REIT) Filinvest REIT Corp. has priced its initial public offering at P7 per share, offering a dividend yield of around 6.6 percent that topped the projected payout of similar vehicles that earlier debuted on the stock market.

This pricing finalizes the size of the country’s third REIT at around P11.44 billion, which could increase to P12.58 billion if the overallotment option were to be exercised.

The dividend yield offered by FLI REIT for 2022 is higher than AREIT Inc.’s projected yield of at least 5.2 percent and DDMP REIT’s estimated yield of 6.4 percent for the same year.

Filinvest REIT priced its IPO at a discount of 15.7 percent from the maximum price of P8.3 per share stated in its earlier prospectus, thereby increasing the equivalent dividend yield. Without the discount, dividend yield would have been at just 5.6 percent for 2022.

Based on a circular issued by the Philippine Stock Exchange, FLI REIT’s offering will run from July 23 to August 3. Upon listing its shares on the main board under the ticker “FILRT” on Aug. 12, FLI REIT will have a market capitalization of P34.2 billion.

About 1.634 billion existing common shares held by sponsor Filinvest Land Inc. (FLI) will be offered to the public, bringing 33.4 percent of FLI REIT’s shares to public hands. In case of excess demand, about 163.42 million additional secondary shares will be sold as part of the institutional offer, bringing the public ownership to 36.74 percent.

April Lee-Tan, head of research at leading online stock brokerage COL Financial, is upbeat on FLI REIT’s offering, citing the company’s “attractive assets and above average yield.”

Filinvest REIT is one of the first business process outsourcing (BPO) office space providers in the country. Its portfolio consists of 16 office towers, two of which have a retail component.

This 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 Securities and Exchange Commission.

Filinvest REIT has 88.4 percent of its gross leasable assets devoted to BPO locators. It does not own the land on which the skyscrapers stand, but such land is secured by 75-year lease agreements.

Based on Filinvest REIT’s prospectus, revenues and net income in 2022 are projected to reach about P4.27 billion and P1.88 billion, respectively.

With a projected dividend payout ratio of 120.7 percent, FLI REIT expects to declare P2.267 billion worth of dividends next year or 46.33 centavos per share, translating to a dividend yield of 6.6 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.