FLI digs deeper into REIT via swap offer

Gotianun-led developer Filinvest Land Inc. (FLI) is preparing to inject more assets into its real estate investment trust (REIT) arm via a P1.87-billion share-swap deal with its minority shareholders.

In a regulatory filing on Wednesday, FLI said it would launch a voluntary tender offer to reacquire 1.87 billion of its shares, equivalent to a 7.69-percent ownership, from the public.

In exchange, minority shareholders will get shares in Filinvest REIT Corp. (FILRT) to increase the company’s public ownership level and allow FLI, the REIT’s sponsor, to inject more assets into its subsidiary.

Jose Antonio Cipres, research analyst at AP Securities Inc., explained that FILRT needed to issue shares to FLI prior to asset injections.

“A higher [public] float would enable FILRT to issue more shares for FLI’s properties without violating the 33.33-percent required minimum public float,” Cipres said in a message to the Inquirer.

Under the Securities and Exchange Commission’s guidelines, REITs have a higher minimum public ownership requirement compared with the 20-percent minimum for other companies debuting on the local bourse. This encourages and gives investors an option to directly invest in projects that are already finished and earning money.

For every one FLI share tendered by a shareholder, they will get 0.32 FILRT shares, the company said.

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FLI shares will be exchanged at P1 each, which is a 20.5-percent premium over its closing price of P0.83 on Wednesday.

“With this share swap, we are also able to create more room for a potential dividend-accretive asset infusion by FLI into FILRT,” FLI president and CEO Tristan Las Marias said in a statement.

Once the share swap is completed, FILRT’s public ownership level will increase to 46.75 percent.