Filinvest Land Inc. (FLI), the real estate arm of the Gotianun Group, has approved a P6.26 billion property-for-share swap transaction with its real estate investment trust (REIT) unit, Filinvest REIT Corp. (FILRT). The deal involves the transfer of the Festival Mall — Main Mall in Filinvest City, Alabang.

In a disclosure to the stock exchange on Monday, FLI announced that its Board of Directors approved the transaction on 24 January.

Under the agreement, FLI will exchange the property for 1.63 billion primary common shares of FILRT at P3.85 per share. The deal, structured as a tax-free swap, allows FLI to monetize its assets while maintaining operational involvement through a lease agreement, pending the Securities and Exchange Commission’s approval.

A property-for-share swap enables a company to transfer ownership of a real estate asset in exchange for shares, providing liquidity and unlocking the value of the asset without a direct sale.

Following the transaction, FILRT’s portfolio will expand by 37 percent to 452,310 square meters, with its occupancy rate rising from 83 percent to 88 percent. The Weighted Average Lease Expiry (WALE) will also extend from 7.3 years to 14.6 years.

Income sources diversification

The acquisition diversifies FILRT’s income sources by integrating retail mall properties into its portfolio, resulting in a mix of 67 percent offices, 6 percent hospitality (Crimson Boracay lot), and 27 percent retail (Festival Main Mall).

Meanwhile, FLI’s ownership in FILRT will increase from 51.06 percent to 63.27 percent, enhancing its potential dividend income. Both FLI and FILRT expect the transaction to boost their dividend payouts.

“This move fulfills the commitment made by our sponsor FLI to continually support the growth and expansion of our REIT portfolio through the infusion of high-quality income-generating real estate assets,” said Maricel Brion-Lirio, president and CEO of FILRT.

“At the same time, we remain true to our investment thesis of sustainable practices in the leasing business, with Festival Mall being partially supplied by renewable energy through the solar panels installed atop the mall,” she added.