SEC okays FILRT takeover of Festival Mall
The real estate investment trust (REIT) arm of Filinvest Land Inc. (FLI) is one step closer to adding the 27-year-old Festival Mall Alabang into its asset portfolio following a go signal from the Securities and Exchange Commission (SEC).
In a stock exchange disclosure on Friday, Filinvest REIT Corp. (FILRT) said the SEC had issued a certificate of approval of valuation for the company’s property-for-share swap with FLI.
FILRT still needs the approval of the Bureau of Internal Revenue before it can proceed with the transaction.
Under the P6.26-billion deal, FILRT would issue 1.63 billion primary common shares to its REIT sponsor at P3.85 each. This is a 21-percent premium over its share price of P3.18 as of Friday afternoon.
It will also increase FLI’s shareholding in FILRT to 63.27 percent from 51.06 percent currently.
In return, FLI, the real estate business of conglomerate Filinvest Development Corp., will turn over Festival Mall-Main Mall in Filinvest City, Muntinlupa to FILRT.
This will raise FILRT’s gross leasable area (GLA) by 37 percent to 452,310 square meters, and its overall occupancy will likewise improve from 83 percent currently to 88 percent, FILRT said in its disclosure.
“The infusion of income-generating retail mall assets is expected to result in an increase in FILRT’s distributable income,” FILRT added. “With the anticipated growth in income and dividends, the transaction creates opportunities for share price movement.”
Strategic shift
Festival Mall will also help diversify FILRT’s predominantly office portfolio. Currently, 91 percent of its GLA are office buildings. Once the transaction is completed, its portfolio mix will be 67 percent offices, 6 percent hospitality and 27 percent retail.
In the first quarter, higher rental income and occupancy buoyed the revenues of FILRT by 9.2 percent to P721 million.
However, its bottom line was flat at P303.75 million because of preterminated lease contracts and higher commission payment.
Costs and expenses, meanwhile, declined by 4.5 percent to P291.3 million on the back of lower man power costs, repair and maintenance.
