Filinvest REIT H1 profit drops on office demand slowdown
The real estate investment trust (REIT) arm of Gotianun-led Filinvest Land Inc. saw profits drop in the first half of the year as office locators expanded at a slower pace given the rise of hybrid work arrangements.
From January to June this year, net income at Filinvest REIT Corp. fell 32.7 percent to P706 million. Revenues amounted to P1.64 billion, down 16 percent from same period last year.
“We are in a period of transition in the office leasing business following the reopening of the economy and the new trend of work on site and work at home hybrid setup,” Filinvest REIT president and CEO Maricel Brion-Lirio said in a statement on Friday.
“Many of our locators’ expansion plans were still on hold during the first half of the year although we continued to lock in the expiring leases,” she added.
The company said higher utility expenses pulled down second quarter net income to P324 million from P382 million in the first quarter of the year. Rental revenues during the same period, however, were up 2 percent.
Filinvest REIT underscored the renewal and signing of 86 percent of leases that would expire this year. This covered about 20,380 square meters of space.
“Only a small 4 percent did not renew and the balance of 10 percent is under negotiation with a high probability of renewal,” Filinvest REIT added.
It also signed new lease deals totaling 4,150 square meters in the second quarter from outsourcing firms and a flexible space facility provider. The lease terms ranged from five to 10 years, the company added.
“We are encouraged to see locators starting to come back but what we are observing is that they are expanding on a smaller scale and a slower pace,” Brion-Lirio said.
“BPO companies, which comprise 91 percent of our tenant base, continue to lead the demand but they are still taking a wait-and-see attitude before they pursue their major expansion plans,” she added.
Filinvest REIT posted an average rate of 88 percent occupancy in the first half of 2022.
Its portfolio consisted of 17 Grade A office buildings totaling about 300,000 square meters of gross leasable area.
