The real estate investment trust (REIT) landscape is taking shape in the country at a dizzying speed as more and more companies join the REIT bandwagon and embark on their respective REIT journeys.
For investors, this means more choices to park their funds and grow their wealth.
Through REIT, ordinary Filipinos can be landlords in their own ways — without shelling out huge amounts of money to build or buy an entire building and without the headaches of maintaining it — and yet still be able to get a share of that property’s recurring income.
Filinvest REIT Corp. (FILREIT) takes this opportunity a step further by offering the largest and purest office REIT, banking on the resilience and stellar growth potential of the BPO sector. It is also the only sustainability-themed REIT, with an expansive portfolio of buildings situated in a green community and huge room for more growth.
Set to become the third publicly listed REIT in the country, FILREIT currently has 301,362 sqm of gross leasable area (GLA) across 17 world-class Grade A office buildings, as rated by Jones Lang Lasalle (JLL). These sit on prime developments in Northgate Cyberzone within the sprawling Filinvest City in Alabang while one building is in the gateway of Cebu IT Park in Lahug, Cebu City.
FILREIT which will offer 1.6 billion common shares plus an over-allotment option of 163.4 million common shares, has set the final offer price of the company’s upcoming initial public offering at P7.00 per offer share with a target listing date on August 12 to raise up to P12.6 billion in gross proceeds.
REITs are mandated by law to distribute 90 percent of distributable income to investors as dividends annually but FILREIT estimates a 100 percent payout ratio for 2021 and 2022, providing a rare golden opportunity for investors to earn and continue earning from this investment.
To illustrate, FILREIT’s projected dividend yield is 6.3 percent for 2021 and 6.6 percent for 2022, the highest among the REITs in the market and significantly higher than prevailing market rates on fixed-income investments such as government and corporate bonds.
Positioned for steady growth
In assessing the growth potential of the REIT, experts said it is important to look at the name behind the REIT and the portfolio of the REIT itself.
FILREIT offers a strong value proposition given the strong track record — more than 50 years — of the Filinvest Group in providing quality products in the market, growing its portfolio, and staying resilient. Filinvest Land, Inc. (FLI), one of the country’s leading property developers, was among the pioneers in BPO office development and was first to establish a campus-style IT Park in the country.
FLI has 31 operational office buildings and 11 more under construction located in key central business districts in the country. Some of these form part of FILREIT’s potential pipeline standing at 315,000 square meters. This ensures a steady stream of income-generating properties into the REIT’s portfolio further fueling its growth and expanding its source of revenue.
Apart from riding on the Filinvest name, FILREIT also offers upside potential from the pandemic-resilient IT-BPO sector.
As of March 2021, 88.4 percent of FILREIT’s occupied GLA is leased to prime, global businesses from the resilient BPO sector which includes globally renowned tenants in banking and financial services, e-commerce, knowledge and business process outsourcing services. This sector will continue to grow amidst global uncertainty from the COVID-19 pandemic, according to global real estate services firm JLL in an Office Market Study of Metro Manila and Metro Cebu.
In the study, it said that demand for office spaces is expected to remain stable and resilient, with the BPO sector leading the growth in the Philippines.
This was echoed in another study by Leechiu Property Consultants in a first-quarter 2021 Market Update. According to Leechiu, demand for office space from the sector grew by 22.5 percent in the first quarter of 2021 compared to end 2020, demonstrating the sector’s continued resiliency amidst the pandemic.
Thus, aside from the steady demand from the BPO sector, FILREIT’s leasing revenues are expected to steadily grow with its fixed contractual escalations averaging five percent per annum for its entire portfolio.
Investing in green
But considering to invest in REITs shouldn’t stop there. Investing in green developments is especially important these days because of the changes mandated by the COVID-19 pandemic.
The future of work and living is now all about sustainability and resiliency, which hopefully would translate to healthier spaces. Even global institutional investors are now choosing to invest in companies that put strong emphasis on ESG, which stands for Environmental, Social, and (Corporate) Governance. Socially responsible investors look for this in companies instead of simply considering the potential profitability of a corporation.
From an investment point of view, it is therefore a wise move to be invested in green developments that are in sustainable communities because it is tantamount to investing in a better future for all.
This means that as a REIT company, FILREIT is sure to attract ESG investors given its green portfolio.
What makes filinvest reit’s portfolio green?
FILREIT’s portfolio consists of green buildings located in sustainable communities.
The 16 buildings are found in Northgate Cyberzone in Filinvest City, the biggest central business district in Southern Metro Manila and the first CBD in the Philippines to attain the coveted LEEDv4 Gold for Neighborhood Development Plan. It espouses the Live-Work-Play model, provides superior workforce accessibility and anyone who has been to the area knows how efficient the city is — from density to lighting to traffic, and more than 30 percent of its entirety dedicated to green and open spaces.
Two of FILREIT’s buildings (Filinvest Axis Tower One and Vector Three) are also LEED Gold certified office buildings and are among the select few that have attained this in the country. LEED, which means Leadership in Energy and Environmental Design, is the most widely used globally recognized green building rating system in the world. According to the JLL office property market study, certifications like LEED and Building for Ecologically Responsive Design Excellence check on the quality of materials used. How these all come together to improve building efficiency ultimately results in lower costs for tenants and boosted employee productivity and retention, JLL said.
Focused on sustainability
Enhancing the green features of the buildings within Northgate Cyberzone is the country’s largest District Cooling System (DCS) that reduces carbon and greenhouse gas emissions. ENGIE, the multinational utilities company, attests to the efficiency of the DCS and how this makes Northgate Cyberzone an attractive destination for global tenants.
“The success of the Northgate Cyberzone DCS gives Northgate a substantial commercial edge to attract new tenants within its IT park and is in line with the Filipino government’s drive toward green energy,” said Thomas Baudlot, CEO, ENGIE South East Asia.
These features mean that tenants are able to achieve energy efficiency and reduce their carbon footprint by as much as 11,500 tons of carbon monoxide per year, equivalent to 12 million pounds of coal burned, 1.3 million smartphones charged, 2,089 homes’ electricity use for one year and 2,501 vehicles driven for one year.
All these green and sustainable features make Northgate Cyberzone an attractive business destination, especially for the demanding IT-BPO sector.
Investing in FILREIT indeed gives investors the best of both worlds — the opportunity to grow their wealth while investing in a better planet for today’s generation and all generations to come.
