FILRT recently announced their 2nd quarter dividend per share of P0.088 which is a -24% reduction from the first quarter DPS of P0.116.

FILRT’s 2nd quarter distributable income was P430 million and I couldn’t find the figure for the 1st quarter to be able to compare. However, the number of shares outstanding for both quarters have remained the same so it would be fair to conclude that the dividend cut was not because of share dilution.

I don’t usually monitor a REIT’s price movement but a -24% dividend cut in one quarter is a big deal for me. It would be sensible for FILRT to release a press statement to explain this. Was it because of a major building expense or did some tenants not renew their leases or perhaps a combination of both. Compared to its peers, FILRT already had a lower average occupancy rate of below 90% for 2021 so did it move even lower for this year?

To compare, CREIT has maintained its 2nd quarter dividend while MREIT and RCR have both increased their 2nd quarter dividend per share. On the main menu, I have a tracker of the yearly DPS growth for all the REITs and it would be interesting to see what the overall performance for 2022 will be. I wonder as well if this reflects the general softness in the office leasing business or is it confined to FILRT. This news serves as a good reminder on the importance of diversification for risk management.

August 12, 2022 update:

FILRT released a statement that the lower 2nd quarter net income was due to higher costs and expenses, primarily utilities. This occured despite a +2% increase in rental revenue compared to the first quarter. Moreover, their average occupancy rate sits at 88%. I am perplexed as to why FILRT would have a considerable increase in utilities expense when they are keen to emphasize their green credentials such as the district cooling system of Filinvest City in Alabang – which is supposed to result in lower electricity bills.