(Message by Josephine Gotianun Yap, president and CEO of Filinvest Land Inc. during the company’s annual stockholders meeting, April 23, 2021)
Looking at our history, we have survived many national, regional as well as global financial crises but this remains to be the most challenging – one that goes beyond mere economics as it has entered our homes and threatened our very survival.
But we go on – inspired by the same mission we had when we started as an affordable housing company – to build the Filipino dream. We remain true to our mission but now it has amplified in its breadth and depth. Beyond housing, we have provided environs to generate employment and an eco-system, a platform to improve the lives of our locators, homeowners and business partners.
This last decade we diversified our revenue streams and now have a 50-50 contribution between our trading and rental income.
FLI consistently grew its revenues and net income over this period of time. Our compounded annual growth rate of 16% for revenues and 12% for net income has unexpectedly been interrupted by this pandemic.
This great interruption however affirmed the deliberate strategy we adopted 8 years ago of focusing on the office segment. We are a pioneer and we grew with the BPO industry since its infancy. An industry that has brought employment to over a million Filipinos and a key driver to our country’s GDP. During this last decade, our office GLA grew almost four fold, and in 2020 it proved resilient. This segment provided a growth of 8% on the back of new inventory and new tenants.
Today, your company has over 781,000 sqm of rental GLA, from the tallest office building in Makati to South Metro Manila’s largest lifestyle mall. You have the largest concentration of offices in Filinvest City, the Largest LEED certified CBD in South East Asia.
Affordable housing remains our core – housing for the typical Filipino family. We have built the Filipino dream in over 163 housing subdivisions and 28 MRB communities with almost 120 buildings to address the still growing demand to live under one’s own roof. FLI projects have always stood out by providing more open spaces and building lesser densities for sustainable living particularly in Greater Metro Manila’s urban jungle.
In 2020, the Philippines experienced one of the longest lockdowns in Asia, resulting in construction delays. Our Customer payments were deferred under the government’s Bayanihan support program. All of this impacted on the recognition of revenues. FLI’s full year real estate revenues reached P9.84 billion, 42% lower than 2019.
While office rental revenues grew 8%, this was dampened by the waivers granted in support of retail tenants who were greatly affected by the lockdowns. The significant contribution from our equity investment in Filinvest Alabang, developer of Filinvest City, brought in P500 million. Overall, we ended the year with total revenues of P17.48 billion, a 32% decline from previous year.
We kept our organization intact but redeployed our teams to adjust to the changes in operations and work from home set ups. We went back to basics, trimming off any fat in our expenses. This brought down our G&A expenses by 9%.
Your company registered a Net income of P 3.96 B in this pandemic year – Lower by 39% compared to P6.52 billion in 2019. This is a better and more resilient performance compared to our peers.
During the fourth quarter of 2020, we experienced a sharp recovery in revenues which we hope can be sustained in 2021.
Your company is in good financial health. FLI continues to have a strong and stable balance sheet. At the end of 2020, our net debt-to-equity ratio was at .85x, still below 1x.
Due to our unblemished credit track record, our banking partners continued to support us as did the retail bond market. FLI raised P 8.1 billion through the issuance of 3- and 5 and a half-year peso fixed-rate bonds in November 2020. The bonds, which attained the highest PRS Aaa rating from the Philippines Rating Services Corporation had an oversubscription of P1.35 billion over the base amount of P6.75 billion. The proceeds of this bond issuance supported the various capital expenditures of the company under this challenging business environment.
In 2020, we continued our 25% dividend payout to our shareholders. For financial prudence – we opted to pay this over two tranches – half in the 2nd Quarter and the balance in the 4th quarter.
In 2021, we are moving forward and embarking on new initiatives. Real Estate Investment Trust or REIT, Logistics and e-commerce Warehouses, and Co-Living Spaces. These initiatives address new trends that will define our future. New products which will widen the base of our investment properties for recurring income. A new financial platform to monetize investments assets as they mature and provide funding to fuel future growth. The fair market value of all our investment projects existing and under construction is P 190 Billion based on the appraisals of 3rd parties.
This year, I am especially proud of the FLI team. I want to express my gratitude to our people especially those on the ground who are taking care of our homeowners and tenants and members of the FLI family. They say Leaders are forged by crisis and I am proud to say that in this pandemic we saw the emergence of leaders across the organization. Together, they took charge, moved with agility, managed with clarity of purpose and passion. They protected and kept our workforce safe first and foremost and re-organized for over 45% to work from home. We optimized our digital foundation – accelerated our digital processes to ensure our company continued to do its business seamlessly – servicing our customers and keeping our financial commitments to our business partners.