Filinvest REIT [FILRT] details revealed (like that weird ticker symbol!)
![Filinvest REIT [FILRT] details revealed (like that weird ticker symbol!)](https://media.philstar.com/photos/2021/07/01/stock-commentary-thumbv3jpg_2021-07-01_08-58-57.jpg)
As mentioned in yesterday’s MB, I wasn’t able to get beyond the headlines in yesterday’s piece about the Filinvest REIT [FILRT] because I couldn’t find a link to the prospectus. Thanks to the two Barkadans that helped me find the link (company website), I’ve finally had a chance to spend a few moments marinating in the details of the transaction.
As mentioned, the news of the JFC/DD REIT really derailed me, but I still learned a few things about Filinvest REIT that I’d like to share with you now, starting with the ticker symbol, which will (sadly) be FILRT.
Only 30% of the offer is available for local retail investors to purchase; 20% is available through Trading Participants (brokers), and 10% through the PSE EASy program that allows “local small investors” (like us) to purchase IPO shares directly. There will be a 10% stability fund, run by BPI Cap.
On the financial side, net income has grown consistently over the past four years; from P1.2 billion in 2017, to P1.4 billion in 2018, to P1.6 billion in 2019, to P1.9 billion in 2020. Interestingly, gross rental income looked to be on the same four-year trajectory, but was relatively flat between 2019 (P2.81 billion) and 2020 (P2.83 billion). Net income was saved by P274m in “other income” that wasn’t realized -- to that degree -- in previous years.
The Q1/21 financial data showed that FILRT was slightly under-performing its Q1/20 rental income revenue total, but was saved by a large deferred income tax benefit to “beat” y/y on net income. The lead business risks that FILRT has identified are: (1) continued performance and growth of FILRT depends on activity and growth in Filinvest City in Alabang, and there’s no guarantee that any of the development plans and infrastructure projects will go ahead as planned, or go ahead at all; (2) FILRT is exposed to all the same risks as the general property market in Metro Manila, like supply/demand, interest rates, and policy changes; and (3) the COVID pandemic will continue to affect income going forward.
There will be a total of ~4.89 billion common shares outstanding after the IPO; according to the rules, Filinvest Land [FLI 1.15 1.77%] will have 0.52 billion shares on 180-day lockup, and 2.57 billion shares on 365-day lockup.
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I don’t know why the FILRT ticker symbol choice was such a let down. Maybe because my mind read it “FLIRT” first, and that was kind of weird, or because I can’t wrap my mind around pronouncing it “fill-REET” because it still looks way more like “fil-ERT”, which is kind of a lame way of saying “flirt”. What makes the ticker symbol even weirder is that it seems like they’d chosen (at some earlier point) to go with the general REIT naming convention by calling it “FREIT”, as evidenced by the Fund Manager’s name as “FREIT Fund Managers Inc”.
From a business perspective, FILRT suffered from the same COVID performance headwinds that all Metro Manila-focused commercial developers did, but it hopes that by focusing on multinationals and high-quality tenants that it can reduce the damage caused by COVID to its tenants going forward. Regardless of how sound that strategy is, FILRT forecasts that it will achieve approximately ?1.9 billion in net income in 2022 (which is flat with 2020 and 2021), with an estimated yield of between 5.6% (offer price) and 6.2% (10% discount), depending on the final offer price.
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