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Manila Bulletin devider Business devider The Stock Market devider FILRT poised for 30% profit jump with Festival Mall in its portfolio

FILRT poised for 30% profit jump with Festival Mall in its portfolio

Published Feb 4, 2025 02:18 am

Filinvest REIT Corporation (FILRT), the real estate investment trust of the Gotianun Group, expects Festival Mall to boost its profits by 30 percent and increase dividend payouts once the property-for-share swap with its sponsor, Filinvest Land, Inc. (FLI), is completed.

In a disclosure to the Philippine Stock Exchange, FILRT said the mall's acquisition will expand its portfolio by 121,862 square meters (sqm), increasing its gross leasable area (GLA) by 37 percent to 452,310 sqm.

The transaction will also improve occupancy from 83 percent to 88 percent and extend the weighted average lease expiry (WALE) from 7.3 to 14.6 years.

The transaction will diversify FILRT's income sources by adding retail mall properties to its portfolio. Currently, 91 percent of FILRT's GLA consists of office buildings. After the infusion, the portfolio mix will be 67 percent offices, six percent hospitality (Crimson Boracay lot), and 27 percent retail (Festival Mall-Main Mall).

"The infusion of income-generating retail mall assets is expected to increase FILRT's distributable income," FILRT said. "The mall can potentially increase FILRT's EBITDA by at least 30 percent per quarter compared to the third quarter 2024 EBITDA. This, in turn, translates to higher dividends per share (DPS) for FILRT shareholders, with DPS growth of 5.65 percent." FILRT added, "With the anticipated growth in income and dividends, the transaction creates opportunities for share price improvement."

The issuance of new shares for the property will increase FLI’s equity in FILRT from 51.06 percent to 63.27 percent, while FILRT's public float will decrease from 46.68 percent to 35.03 percent.

In an earlier disclosure, FLI said it is selling the 26-year-old Festival Mall to FILRT for 1.63 billion FILRT shares at an issue price of ₱3.85 per share, totaling ₱6.26 billion, in a tax-free property-for-share swap. Upon Securities and Exchange Commission approval, FLI and FILRT will execute a lease agreement for the property.

FILRT said the issue price represents a 30 percent premium over the 30-day volume-weighted average price of ₱2.94 per FILRT share.

FILRT's diversification into mall leasing follows its expansion into the hospitality sector with the P1.05-billion cash acquisition of 2.9 hectares of land owned by Filinvest Development Corporation (FDC) in Boracay. The land is leased to Boracay Seascapes, Inc. (BSI), the owner of Crimson Resort & Spa Boracay and an FDC subsidiary.

Related Tags

Festival Mall Maricel Brion-Lirio Filinvest Land Inc. Filinvest REIT Corporation
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