Filinvest Land, FILRT eye property-for-share swap agreement

Property developer Filinvest Land Inc. (FLI) and Filinvest REIT Corp. (FILRT) announced plans for a P6.26-billion property-for-share swap deal.

In a statement to the Philippine Stock Exchange, FLI said it would sign a property-for-share swap where it will transfer its ownership over Festival Mall-Main Mall to FILRT, in exchange for 1,626,003,316 primary common shares of FILRT at an issue price of P3.85 apiece.

Festival Mall-Main Mall, which has a gross leasable area of 121,862 square meters, is located in Filinvest City, Alabang, Muntinlupa City.

FLI said the primary common shares to be issued by FILRT to FLI will come from the unissued common shares of FILRT. This is subject to the approval by FILRT's shareholders and regulatory agencies.

FLI and FILRT will execute a lease agreement for the property upon the Securities and Exchange Commission's approval of the transaction.

The deal price was set at a 30% premium over FILRT's 30-day volume-weighted average price (VWAP) of %u20B12.94 per share or the market price, within the price range of fair value provided by FTI Consulting's fairness opinion and LeeChiu Property Consultants Inc.'s valuation report.

The transaction will allow FLI to increase its equity in FILRT from 51.06% to 63.27%, creating opportunities for the sponsor to improve dividend income.

Post-transaction, FILRT will increase its total portfolio by 37% to 452,310 square meters, while improving occupancy from 83% to 88%.

The properties' weighted average lease expiry (WALE) will also extend from 7.3 years to 14.6 years.

FILRT will also be able to diversify its income sources by integrating retail mall properties into its portfolio.

Upon infusion, FILRT's portfolio mix will comprise 67% offices, 6% hospitality (Crimson Boracay lot) and 27% retail (Festival Main Mall).

"This move fulfills the commitment made by our sponsor FLI to continually support the growth and expansion of our REIT portfolio through the infusion of high-quality income-generating real estate assets," said FILRT president and CEO Maricel Brion-Lirio.

"At the same time, we remain true to our investment thesis of sustainable practices in the leasing business with Festival Mall being partially supplied by renewable energy through the solar panels installed atop the mall," she said.