Filinvest Group’s REIT makes market debut

FILINVEST REIT Corp. has debuted in the stock market on Thursday, Aug. 12, 2021, amid the enhanced community quarantine in Metro Manila, signaling “stability and resilience of real estate investment trust (REIT) as an asset class,” the Philippine Stock Exchange (PSE) said.

Ramon Monzon, PSE president and chief executive officer (CEO), lauded the Filinvest Group for pursuing the initial public offering (IPO) of FILREIT amid uncertain times.

“This speaks of the company’s confidence in the quality of its REIT offering and its optimism of the country’s imminent recovery from the pandemic,” he said, during the virtual launch.

REITs are companies that own or finance income-producing real estate across a range of property sectors.

Filinvest Land Inc. president and CEO Josephine Gotianun-Yap described the group’s market debut as a “strong vote of confidence in our country,” amid these challenging times.

“It signifies the investors’ ability to look beyond the Delta variant and is an acknowledgement that the country is headed towards a recovery with our accelerated vaccine rollout particularly in the National Capital Region Plus,” she said.

While others saw a crisis, she said FILREIT’s investors saw what they saw—an opportunity to enter the REIT market at an attractive yield.

“It is an opportunity to participate in the income streams from what has proven to be one of the most resilient industries—the business process management (BPM) and knowledge process outsourcing sector,” she said.

FILREIT is entering the stock market with a portfolio of 17 Grade-A office buildings, two of which are LEED-certified buildings.

It has more than 300,000 square meters of gross leasable area and a client base consisting of multinational business process management (BPM) companies and regional operation headquarters of large multinational corporations.

As of April this year, Filinvest REIT has an average occupancy rate of 90.3 percent, which according to Monzon, is a commendable achievement even in the threat of reduced demand for office spaces due to the pandemic.

Filinvest REIT’s projected dividend yields of 6.3 percent and 6.6 percent for 2021 and 2022, respectively, are the highest so far among listed REITs.

“It will certainly attract investors seeking good, stable yields,” Monzon said.

The proceeds raised from the IPO will be used by the company to acquire nine office buildings, three retail buildings, five mid-rise residential buildings, industrial lots, raw land and expansion of the district cooling system.

REIT’s potential growth

Securities and Exchange Commission chairman Emilio Aquino, meanwhile, said investors can take advantage of the fast growth in the real estate business without owning an actual real property by investing in REITs.

“They are made up of income-generating properties just like the FILREIT’s portfolio of 17 fully operational office buildings located in Alabang and Cebu. As mandated by law, FILREIT is required to distribute at least 90 percent of the income of their portfolio as dividends annually,” he said.

At present, the total REIT market capitalization is estimated to be around P131.1 billion.

“This will represent 0.74 percent of the annualized gross domestic product (GDP). That’s 0.81 percent of the total market capitalization and 1.02 percent of the domestic market capitalization. This data implies the Philippine REIT’s potential for growth. REITs in other countries which are already mature markets account for around three to seven percent of their GDP,” he said.

Finance Secretary Carlos Dominguez III said the Duterte administration set the stage for REITs to flourish in the country after 11 years of deadlock.

“I describe this investment mechanism as a powerful financial tool. This is borne out of the two previous successful listings. I am sure that Filinvest will further underscore the significance of this financial instrument,” he said.

He said the Filinvest REIT listing underscored the confidence that the Philippine economy is on track to a solid recovery from the difficulties brought about by the pandemic. (JOB)