FILINVEST Land, Inc. (FLI) plans to make room for potential asset infusions into its real estate investment trust (REIT) company as the property developer’s board approved a P1.87-billion capped voluntary tender offer via a share-swap deal in exchange for Filinvest REIT Corp. (FILRT) stocks.
The tender offer aims to purchase or reacquire up to 1.866 billion FLI common shares, equivalent to 7.69% ownership, in exchange for FILRT shares owned by the property developer, FLI said in a statement to the stock exchange on Wednesday.
FLI shares will be exchanged at P1, which FLI said is “a 56% premium” to its 10-day and 30-day volume-weighted average prices (VWAP), both at 64 centavos. FILRT has a 10-day VWAP of P3.11 and a 30-day VWAP of P3.08.
The company will exchange 0.32 FILRT share for every one FLI share tendered.
Once the share swap is completed, FILRT’s public ownership will reach 46.75%, higher than the current 34.48% as well as the 33.33% minimum public ownership threshold set by the local bourse operator for REITs.
FLI President and Chief Executive Officer Tristaneil D. Las Marias said the share swap provides room for a “potential dividend-accretive asset infusion by FLI into FILRT.”
“Despite current share price challenges, we continue to believe in the intrinsic value of FLI, as we enter a more positive macroeconomic environment that favors our business. The share buyback allows existing FLI shareholders to unlock value,” Mr. Las Marias said.
“Not only does the offering value their shares higher than the current FLI market price, but they are also getting higher-yielding FILRT shares in return. With this offering, we intend to safeguard our investors from market volatility to allow them to maximize value from our shares,” he added.
FLI tapped FTI Consulting to issue a valuation and fairness opinion to determine the reasonable and fair range of prices for both shares and the exchange ratio between FLI and FILRT shares.
Meanwhile, FLI said the tender offer provides an opportunity for FLI shareholders to participate in REITs and to gain exposure to “income-generating properties with the potential for capital appreciation.”
“FLI shall submit its reinvestment plan on settlement date of the voluntary tender offer for the total value of FILRT shares that will be exchanged pursuant to such tender offer. The cash equivalent of the total value of FILRT shares shall be allotted by FLI for reinvestment for real estate projects in the Philippines,” the property developer said.
FLI improved its first-half attributable net income to P1.54 billion as consolidated revenue jumped by 15.8% to P11.49 billion, led by the growth of its residential and co-living segments.
FILRT saw a 7% increase in its net income for the first semester to P601 million. Despite the higher net income, the company recorded an 11% drop in revenue to P1.4 billion, which was offset by 3.1% reduction in costs and expenses to P643 million on “prudent” management of company resources.
The REIT company has a portfolio consisting of 17 office buildings spanning over 300,000 square meters of gross leasable area, of which 16 are located in Filinvest City, Alabang and another building in Cebu City. It also has a 2.9-hectare land leased to the owner and operator of Crimson Resort & Spa Boracay.
On Wednesday, FLI shares rose by 22.06% or 15 centavos to 83 centavos each while FILRT stocks gained by 1.63% or five centavos to P3.11 per share. — Revin Mikhael D. Ochave
