Filinvest Land, Inc. is preparing for another asset infusion into its real estate investment trust Filinvest REIT Corporation (FILRT) by undertaking a P1.55 billion tender offer for its shares in exchange for FILRT stock.
In a disclosure to the Philippine Stock Exchange, the firm said its Board has approved a capped voluntary tender offer to purchase or reacquire up to 1.87 billion common shares, equivalent to approximately 7.69 percent ownership of FLI’s outstanding and listed stock.
The tendered FLI shares will be exchanged with FILRT shares owned by FLI at an exchange ratio of 0.32 FILRT share for every one FLI share.
FLI jumped 22 percent to P0.83 per share after the stock swap announcement while FILRT’s share price improved to P3.11 apiece.
“The transaction will provide FLI shareholders the opportunity for their shares to be bought back in exchange for those of FILRT. FLI stockholders stand to gain from the offer by benefiting from price appreciation and a stronger dividend yield from FILRT shares,” FLI said.
Upon the successful completion of the share swap, public ownership of FILRT will increase to 46.75 percent, broadening FILRT’s shareholder base, and placing it comfortably above the 33.33 percent PSE minimum public ownership requirement for REITs.
“Despite current share price challenges, we continue to believe in the intrinsic value of Filinvest Land, as we enter a more positive macroeconomic environment that favors our business,” said FLI President and CEO Tristan Las Marias.
He noted that, “The share buyback allows existing FLI shareholders to unlock value. Not only does the offering value their shares higher than the current FLI market price, but they are also getting higher-yielding FILRT shares in return.
“With this share swap, we are also able to create room for a potential dividend-accretive asset infusion by FLI into FILRT. With this offering, we intend to safeguard our investors from market volatility to allow them to maximize value from our shares.”
As of Sept. 23, 2024, FLI shares traded at a 30-day volume weighted average price (VWAP) of P0.64 and a 10-day VWAP of P0.64 as well, while FILRT traded at a 30-day VWAP of P3.08 and 10-day VWAP of P3.11.
FLI shares will be exchanged at P1.00, which is a 56 percent premium to both its 30-day and 10-day VWAP. The exchange ratio of 3.11 FLI shares to every one FILRT share is based on the 10-day VWAP.
FLI declared dividends this past May amounting to P1.21 billion, with a dividend yield of five percent. FILRT, on the other hand, declared dividends of P1.21 billion in August with a yield of eight percent in annualized terms.
The offer also provides FLI shareholders with a compelling opportunity to participate in REITs, gaining exposure to a portfolio of income-generating properties with the potential for capital appreciation.
FILRT’s portfolio consists of 17 Grade A and LEED Gold-certified office buildings that feature green and sustainability-themed elements.
With over 300,000 square meters of gross leasable area (GLA), 16 of the buildings are located in Northgate Cyberzone in Filinvest City, Alabang.
Another building, Filinvest Cyberzone Cebu Tower 1, is situated at the gateway of Cebu IT Park in Lahug, Cebu City. Rounding out the portfolio is 2.9 hectares of land leased to the owner and operator of Crimson Resort & Spa Boracay, bringing the REIT’s total gross leasable area (GLA) to over 330,400 square meters.
FLI engaged FTI Consulting to issue a valuation and fairness opinion to determine the reasonable and fair range of prices for both FLI and FILRT shares and the exchange ratio between FLI and FILRT shares.