It seems FILRT is waking up and making positive moves. It is transforming into a diversified REIT with malls and hotels with the aim of reducing the GLA contribution of its office assets to around half by next year :

I.

The board has just greenlit a major acquisition that promises to significantly boost the REIT’s portfolio.  They’re set to acquire the iconic Festival Mall building in Filinvest City, Alabang, from its parent company, Filinvest Land. The acquisition will be executed via a property-for-share swap.  FILRT will issue 1,626,003,316 primary common shares to FLI at a price of P3.85 per share, totaling a substantial P6.26 billion.
So, what’s FILRT getting for this investment?  They’ll take ownership of the Festival Mall’s main building, boasting a massive 121,862 square meters of gross leasable area.  And the benefits don’t stop there.  FILRT anticipates some impressive improvements to its key metrics:
* Occupancy Rate: Projected to jump from 83% to 88%.
* Weighted Average Lease Expiry (WALE):  Expected to nearly double, from 7.3 years to a much healthier 14.6 years.
This acquisition is a major strategic move for FILRT, strengthening its position in the market and offering potentially greater stability and returns for investors.
However, the deal isn’t finalized just yet.  FILRT stockholders will need to give their stamp of approval at a meeting scheduled for March 4th.  Furthermore, the transaction requires the go-ahead from the Securities and Exchange Commission (SEC) before the ownership transfer can be completed.

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Sharing some information on condotels for those wanting to include this in their portfolio. Condotels are condominium units but professionally managed as hotels or serviced apartments with the unit owner getting a share of the income.

Here’s a Youtube video on condotels:

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REITs are primarily valued according to their ability to provide a steady and increasing stream of quarterly dividends. For example, AREIT’s share price has increased by +35% since IPO while FILRT has lost -55%, reflecting its reduced dividends. Another way of looking at REITs is the quality of the properties that they own. As the saying goes in real estate; its location, location, location.

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Sharing these 3 fantastic videos on REITs from DragonFi. These are probably the best Youtube videos on Philippine REITs that I’ve come accross. I highly recommend watching all three from beginning to end, for beginners and seasoned investors alike.

There are important considerations for income focused REIT investors: decent returns, moderate risk and stable and growing dividends per share (Ahem! I’m looking at you FILRT and DDMPR).

Even without further acquisitions, a well run REIT can maintain or slightly increase the dividends from contracted rental escalation, managing costs and attracting quality tenants. But the biggest determinant in a REIT’s ability to substantially grow dividends is the  continuous acquisition of assets with a stable rental income.

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