FILREIT leading growth in sustainable office spaces
Written by: Amy R. Remo
Filinvest REIT Corp. (FILREIT) is banking on a resilient, upbeat business process outsourcing (BPO) industry to sustain the stellar growth of its office portfolio beyond the pandemic.
Reputable multinational BPOs currently account for 88.4 percent of the occupied gross leasable area (GLA) in FILREIT’s portfolio as of March 2021, thus providing a stable source of revenues for the company. About 8.8 percent are leased out to traditional offices and retail, which have also seen a growing demand.
“The stability and growing demand of multinational BPO firms and regional operating headquarters make us bullish about the FILREIT initial public offering (IPO). As you know, BPOs currently comprise 88 percent of the occupied gross leasable area of FILREIT’s portfolio,” said FILREIT president and CEO Maricel Brion-Lirio.
“The Philippines is one of the most attractive BPO markets globally. Based on the latest Report of IT-BPAP (IT-Business Process Association of the Philippines), the IT-business process management (BPM) sector grew by almost 2 percent in 2020 and BPOs are cautiously optimistic to reach the 5.5-percent increase in revenues and 5-percent increase in manpower by 2021-2022. This is shared by Colliers International, which said in its first-quarter report that the IT-BPM sector grew despite the pandemic and displayed signs of early recovery,” Lirio explained.
Strong trust, confidence
FILREIT has in its portfolio 17 buildings, 16 of which are located in Northgate Cyberzone, a Philippine Economic Zone Authority-accredited IT park in Filinvest City, Alabang. Cumulatively, these Grade A buildings have over 300,000 sqm of leasable space, of which 90 percent remain occupied despite the pandemic.
What’s more impressive is that FILREIT enjoys a 97.6 percent renewal rate among its top 20 tenants as of March this year. This can only signal the strong trust and confidence of premium tenants on Filinvest Land—the parent firm of FILREIT and one of the country’s largest developers with over 50 years of experience.
Take the case of SLK Global Philippines Inc., a business process transformation enterprise offering digital platforms and solutions for the financial services industry, which has been operating from Northgate Cyberzone over the last five years.
“SLK Global shortlisted the Philippines after a long due diligence and then narrowed it down to Northgate Cyberzone Alabang. The world class infrastructure, proximity to local transport, abundant talent pool, low to no flooding, competitive rentals and safety of our employees were key factors for us to choose [CPI, the predecessor of FILREIT],” said SLK Philippines president Japjit Sobti.
According to Sobti, operating in a Grade A building in Northgate checks all the boxes for SLK Philippines, as it is able to provide 24/7 operations efficiently, build comfortable workspaces for employees and create value for its customers. There’s stable power supply, good HVAC systems, modern security and access control system, and efficient layout, among others.
For similar reasons, the Luxembourg-headquartered Majorel chose Northgate Cyberzone, which has been its home in the Philippines for the past seven years.
“Northgate is an ideal location due to its nearby transportation hubs. This allows us to pull from various locations such as Sucat and various (areas) in the South like Las Piñas, Muntinlupa and parts of Cavite which previously would take employees from there over two hours to get to Makati to work. The huge labor pool of fresh grads from the universities and colleges makes it rich in recruitment capabilities,” Carcamo explained.
He also pointed out that the decision to locate in the Grade A buildings within Northgate Cyberzone is a strategic move as “Grade A buildings possess high quality infrastructure, basement parking, great access and are professionally managed. All these benefits provide a great experience for our employee base, which at the end of the day is our main priority.”
Besides the presence of high-value BPO locators like SLK Philippines and Majorel, FILREIT is more than well positioned for steady growth for a number of reasons.
These include the 5 percent average annual rental escalations, which will translate into a steady increase in rental revenues from existing contracts. Inorganic growth will come from possible infusion of other properties—with about 315,000 sqm of GLA—into the REIT company from Filinvest Land’s pipeline.
Sustainable features, much sought in particular by multinational BPOs, figure prominently as buildings in FILREIT’s portfolio are located in Filinvest City, which has received the LEEDv4 Gold for Neighborhood Development Plan certification—the first central business district (CBD) in the Philippines to earn such recognition. Two office buildings here—Filinvest Axis Tower One and Vector Three—have secured LEED Gold certifications.
Locators within Northgate Cyberzone likewise benefit from a conducive, cohesive live-work-play-and-learn environment given the proximity to residences, leisure, commercial, and sociocivic spaces; a strategic, highly accessible location; advanced infrastructure and world-class facilities; expansion option for tenants given a pipeline of Grade A buildings; and availability of well experienced and proactive property management service.
All these bode well for the investors of FILREIT, which has started the offer period for its P12.6-billion IPO. The third REIT company in the country is selling 1.63 billion shares priced at P7 a piece with an overallotment option of 163.42 million.
At the offer price, the projected dividend yield as stated in the REIT plan is 6.3 percent for this year and 6.6 percent for 2022. The offer period is until August 3 while listing at the Philippine Stock Exchange is on August 12.
Indeed, all the fundamentals for FILREIT’s portfolio are favorable—priming the company for steady growth, while offering a sound, lucrative investment opportunity that will prove to be an excellent addition to your own portfolio.
For more details on FILREIT’s initial public offering you may visit https://filinvestreit.
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