FILRT Acquisition of Real Property from FLI Under a Tax-Free Property-for-Share Swap Transaction

On March 5, 2025, Filinvest REIT Corp. (FILRT) and Filinvest Land, Inc. (FLI) executed the Memorandum of Agreement and the Deed of Exchange, pursuant to the property-for-share swap whereby FLI will transfer its ownership over the “Festival Mall - Main Mall,” consisting of a building and certain machinery and equipment therein that are owned by FLI, located at Filinvest City, Alabang, Muntinlupa City (the “Property”) in favor of FILRT, in exchange for 1,626,003,316 primary common FILRT shares to FLI at an issue price of P3.85 per share, with an aggregate value of P6,260,112,766.60 (the "Transaction").

FILRT’s Related-Party Transaction Committee and Board of Directors unanimously approved the Transaction at their special meeting on January 24, 2025, and it was subsequently approved by FILRT’s stockholders during their special meeting on March 4, 2025.

​Festival Mall-Main Mall which is located in Filinvest City, Alabang, Muntinlupa City, consisting of a building with gross leasable area of 121,862 square meters, and certain building machinery and equipment.

​The property was appraised by Leechiu Property Consultants, Inc. (Leechiu) and a fairness opinion was provided by FTI Consulting.

For the valuation of the property, a discounted cashflows (DCF) approach was used as the primary method to determine the value of the property. Under the DCF approach, the future cashflows of the property was discounted using a weighted average cost of capital (“WACC”). The WACC was determined using a capital asset pricing model. A direct capitalization approach was also used as secondary reference for the valuation of the property.

For the valuation of the shares, FTI Consulting used various methodologies such as the DCF approach, a dividend discount model, and comparable public companies’ method, to arrive at a range of values of the fair value of FILRT shares.

The primary common shares to be issued by FILRT to FLI will come from the unissued common shares of FILRT. Upon SEC’s approval of the Transaction, FLI and FILRT shall execute a lease agreement for the Property.

Further, FILRT shall apply for the additional listing of the shares to be issued with the Philippine Stock Exchange.

The acquisition of the Property will expand FILRT’s portfolio by an additional 121,862 square meters, thereby increasing the gross leasable area (GLA) of FILRT by 37%. This likewise will improve occupancy from 83% to 88% and extend the weighted average lease expiry (WALE) from 7.3 to 14.6 years. This will also increase FLI equity in FILRT from 51.06% to 63.27%.

This transaction is designed to achieve the following objectives:

a. Upon successful completion of the transaction, the gross leasable area (GLA) of FILRT will increase by +37% from 330,448 sq.m. to 452,310 sq.m.

b. The Transaction allows FILRT to diversify its income sources by integrating retail mall properties into its portfolio. Prior to the infusion, 91% of the GLA of FILRT are office buildings. Post infusion, the portfolio mix of FILRT will be 67% offices, 6% hospitality (Crimson Boracay lot) and 27% retail (Festival Main Mall).

c. The infusion of income-generating retail mall assets is expected to result in an increase in FILRT's distributable income. This, in turn, translates to higher dividends per share for FILRT shareholders, enhancing the overall attractiveness of the Real Estate Investment Trust (“REIT”) to investors. DPS growth resulting from the infusion will be 5.65%.

d. With the anticipated growth in income and dividends, the transaction creates opportunities for share price improvement.

Filinvest REIT Corp. (FILRT) is a real estate investment trust (REIT) company whose sponsor is Filinvest Land, Inc., one of the largest property developers in the Philippines with an established portfolio of residential, office, retail and industrial developments around the country.

FILRT was publicly listed on the Philippine Stock Exchange on 12 August 2021 as the Philippines’ first sustainability-themed REIT. Its original portfolio consists of 17 Grade A and LEED Gold certified office buildings which include green and sustainability-themed features. An addition to the portfolio is 2.9 hectares of land that is being leased to the owner and operator of Crimson Resort & Spa Boracay.

​Totaling over 330,000 square meters of gross leasable area, 16 of the buildings are in Northgate Cyberzone in Filinvest City in Alabang. Filinvest City is a 244-hectare mixed-use and integrated city that is the first and only central business district in the Philippines to receive LEED® (Leadership in Energy and Environmental Design) v4 Gold for Neighborhood Development Plan certification as well as a three-star BERDE (Building for Ecologically Responsive Design Excellence) certification. Another building is Filinvest Cyberzone Cebu Tower 1 located in the gateway of Cebu IT Park in Lahug, Cebu City.

Filinvest Land, Inc. (FLI) is one of the country’s leading full-range property developers. For over 60 years, the company has built a diverse project portfolio spanning the archipelago including large-scale townships: Havila (306 hectares), Timberland Heights (677 hectares) and Manna East (60 hectares) in Rizal, Ciudad de Calamba (350 hectares), The Wood Estates in Cavite (94 hectares) City di Mare in Cebu (50 hectares), and Palm Estates in Talisay City (51 hectares). FLI has since built more than 200 residential developments across the country.

​FLI owns 20% of Filinvest Alabang, developer of Filinvest City (244 hectares), a central business district in southern Metro Manila. FLI is also developing two townships in the Clark Special Economic Zone: its industrial and logistics park and mixed- use development at New Clark City (288 hectares) and Filinvest Mimosa+ Leisure City (201 hectares) in partnership with Filinvest Development Corporation.