Filinvest REIT Expands Portfolio with P6.26-Billion Festival Mall Property-for-Share Swap
Filinvest REIT Corp. (PSE:FILRT) is set to significantly expand and diversify its portfolio through a P6.26-billion property-for-share swap with its parent company, Filinvest Land, Inc. (PSE:FLI). This move will integrate the 121,862-square-meter main mall of Festival Mall in Alabang into FILRT's real estate investment trust (REIT) holdings, marking its entry into the retail segment.
The property-for-share swap, approved by the respective Boards of Directors of FILRT and FLI on January 24, 2025, will see FLI transferring ownership of Festival Mall-Main Mall in exchange for 1.63 billion newly issued FILRT shares at P3.85 per share. This valuation represents a 30% premium over FILRT's 30-day volume-weighted average price (VWAP) of P2.94 and aligns with third-party valuation assessments from FTI Consulting and Leechiu Property Consultants.
With the inclusion of Festival Mall, FILRT's total gross leasable area (GLA) will increase by 37% to 452,310 square meters. The transaction is expected to drive occupancy rates higher, from 83% to 88%, and extend FILRT's Weighted Average Lease Expiry (WALE) from 7.3 years to 14.6 years, ensuring a longer-term revenue stream.
Post-transaction, FILRT's portfolio will be more diversified, consisting of:
-
67% Office Spaces – The REIT's primary focus remains on office leasing, particularly within Northgate Cyberzone in Alabang.
-
27% Retail – The addition of Festival Mall introduces a new revenue stream from retail leasing.
-
6% Hospitality – The company retains its interest in the Crimson Resort & Spa Boracay property.
The transaction enhances both companies' financial positioning and aligns with FILRT's long-term growth strategy:
-
FLI's Increased Stake: FLI will raise its equity ownership in FILRT from 51.06% to 63.27%, strengthening its control over the REIT and benefiting from higher dividend income potential.
-
Dividend Accretive: The addition of Festival Mall is expected to positively impact FILRT's income, potentially leading to increased dividend distributions.
-
Retail Expansion: By integrating a prime retail asset, FILRT reduces its dependence on office leasing and adds resilience to its portfolio, particularly in fluctuating commercial real estate markets.
A key component of this acquisition is its alignment with FILRT's sustainability-focused investment strategy. Festival Mall's energy-efficient initiatives include a 2.8 MW solar rooftop system that provides about 28% of the mall's peak energy demand, reducing carbon emissions by approximately 41,000 tons annually—equivalent to removing nearly 8,855 cars from Metro Manila's roads.
FILRT has a strong track record in sustainability, operating with 100% renewable energy in Northgate Cyberzone, and managing EDGE- and LEED-certified properties. The acquisition of Festival Mall reinforces this commitment while offering an attractive leasing option for global brands with sustainability mandates.
The transaction remains subject to regulatory approvals, including a vote at a special stockholders' meeting of FILRT on March 4, 2025. Upon approval from the Securities and Exchange Commission (SEC), FLI and FILRT will execute a lease agreement to formalize the transition.
This property-for-share swap underscores a broader trend of REIT sponsors infusing new assets into their portfolios to boost growth, enhance income stability, and create long-term shareholder value. The move also reflects a growing shift in investor appetite towards diversified REITs that include retail, office, and hospitality components.
FILRT's stock responded positively to the announcement, closing higher at P3.14 per share, a 1.95% increase, reflecting investor confidence in the deal's long-term benefits.
Filinvest REIT's acquisition of Festival Mall through a P6.26-billion property-for-share swap is a strategic move that strengthens its portfolio, enhances financial returns, and reinforces its commitment to sustainability. As the REIT market evolves, FILRT's diversified portfolio positions it as a resilient player in the Philippine real estate sector.