Filinvest REIT Corp. (FILRT), the flagship commercial REIT of the Filinvest group, recently held its virtual Annual Stockholders Meeting where the company shared highlights of its 2022 performance, including updates on its office leasing business
FILRT recorded a net income of ₱1.31 billion in 2022 that was achieved on the back of rental and other revenues of ₱3.24 billion. Average occupancy for the year was 89 percent, including the newly infused Boracay property that was added to the portfolio in December 2022. The infusion added 29,086 square meters of gross leasable area (GLA) to FILRT’s portfolio and expanded its income profile beyond office leasing and into the hospitality sector with the lease of Crimson Resort and Spa Boracay.
Its office leasing business finalized new leases and signed Letters of Intent totaling almost 10,300 square meters in the first quarter of 2023. This is more than double the new leases signed for the entire year in 2022. The tenants that signed are a mix of multinational BPO and traditional companies.
“We are happy to note that tenants are starting to come back and pushing forward with their expansion plans. We are hopeful that this is a sign of reversal from the challenge we faced last year due to the implementation of hybrid work set-ups in PEZA Special Economic Zones like our Northgate Cyberzone property in Alabang,” said FILRT president and chief executive officer Maricel Brion-Lirio. FILRT and the office leasing segment have experienced changes due to the evolving global workplace environment, as remote work has become more prevalent.
Of the 10,300 square meters of new leases, about 56 percent are existing multinational BPO clients of FILRT that need additional space for their expansion. Existing traditional tenants likewise took up additional space for expansion, accounting for 24 percent of total. The balance of 20 percent was signed by new traditional tenants. Meanwhile, more than 13,300 square meters or 32 percent of the lease expiries for 2023 have already been renewed, with the balance due for renewal during the remainder of the year.
FILRT expects its portfolio to benefit from intrinsic and organic growth as building occupancy improves. Contractual escalation terms are built into about 90 percent of the office leases, averaging 5 percent per annum rental escalation overall.
The inorganic growth potential of FILRT is backed by the right of first refusal (ROFR) that sponsor Filinvest Land Inc. (FLI) has granted to FILRT. This covers all significant commercial properties owned by FLI and its wholly owned subsidiaries. FLI has about 465,000 square meters of office and mall gross GLA in key CBDs that are potential acquisitions for FILRT. Other asset classes may also be added to FILRT coming from the commercial projects of the Filinvest group.
“Our sponsor FLI is fully committed to grow FILRT’s portfolio with regular asset infusions. We are guided by a clear investment strategy in order to sustain the portfolio expansion and provide a stable and competitive return to investors,” added Ms. Brion-Lirio.
FILRT is focused on sustainability and the utilization of eco-efficient assets. Two buildings in FILRT’s portfolio are LEED Gold-certified while two other buildings passed the criteria for Level 1 certification on EDGE (Excellence in Design for Greater Efficiencies) developed by the International Finance Corporation. These green building certifications confirm FILRT’s commitment to sustainability, particularly on energy, water and resource efficiency. As a sustainability-themed REIT that is backed by a strong sponsor and ESG principles, FILRT looks forward to growing of resilient and robust real estate investment portfolio.