Filinvest REIT [FILRT 5.72] [link] FILRT declared a Q3/22 dividend of P0.088, payable on December 20 to shareholders of record as of December 1.
The dividend has an annualized yield of 6.15% based on the previous closing price, which is exactly the same as its pre-dividend yield because FILRT’s Q3 div is the same as its Q2 div.
Relative to FILRT's IPO price, the dividend increased FILRT's total stock and dividend return to -9.31%, up from its pre-dividend total return of -10.57%.
FILRT also announced that its board had voted to approve the acquisition of three parcels of land in Boracay from its ultimate parent company, Filinvest Development Corporation [FDC 6.49 1.41%], for P1.05 billion in cash.
FILRT is a subsidiary of Filinvest Land [FLI 0.82 1.20%], which is itself a subsidiary of FDC. Despite being referred to as a “flagship commercial REIT of the Filinvest group” in the press release, FILRT is the group’s only REIT, and neither FDC nor FLI have revealed plans to list additional REITs.
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Well there it is. That sudden dividend implosion that we saw in Q2, and that the market seemed to ignore, has just been repeated. We are now in a “fool me twice” situation here.
In this competitive fixed-income environment, there’s no room for dividends that shareholders can’t rely on.
The “backward looking” yield (last 4 dividends) after this dividend is around 7%, which is already low, but the “forward looking” yield (Q3 div * 4) is only 6.15%.
Before the dividend stream dried up, FILRT’s yield traded somewhere above its higher-class peers (RL Commercial REIT [RCR 5.25 0.96%] and MREIT [MREIT 11.88 0.17%]) and below DDMP [DDMPR 1.30 unch].
The REIT landscape has changed since then, but if we consider RCR’s 7.49% to be the lower bound, and DDMPR’s 8.39% to be the upper bound, that would make FILRT’s forward yield somewhere in the neighborhood of 8.00%.
And that’s before the uncertainty that FILRT smeared all over the income stream by suddenly dropping it without explanation. To get FILRT’s forward yield to 8.00%, the price would need to drop to P4.40/share (23% lower).
I was thinking that maybe FILRT was holding back on dividends to conserve cash in anticipation of this purchase, but they ended Q3 with over P2.2 billion in cash.
Even if they’d maintained their Q1 dividend rate through Q2 and Q3, they’d still have over P2 billion in cash to make this P1 billion purchase.
Maybe the simplest answer is the best answer: maybe the dividend just sucks?
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