Amid reports alleging that several Villar Group companies owe billions of pesos in rent, VistaREIT Inc. (VREIT), the listed real estate investment trust of tycoon Manuel Villar Jr., assured investors that its operations remain stable and its finances strong, allowing it to continue distributing dividends to shareholders.

In a stock exchange disclosure on Friday, the company clarified that most of its receivables represent future rental escalations that are not yet due and will only be billed according to the escalation terms in its lease contracts.

Future rental escalations

“The majority of the Company’s receivables pertain to future rental escalations. These amounts are not yet due and will only be billed upon the application of the relevant escalation rates, in accordance with the terms of our lease agreements,” VistaREIT chief financial officer and Investor Relations head Melissa Camille Z. Domingo said in the report.

VistaREIT pointed out that under Philippine Accounting Standards (PAS) 17, rental income is recognized on a straight-line basis over the lease term, including future escalation amounts.

Timing difference

This creates what it called a “timing difference” between revenue recognition and actual cash collection but does not affect its distributable income or dividend capacity.

“These accounting treatments do not affect the Company’s distributable income or its ability to pay dividends,” Domingo said, adding that receivables related to future rental escalations and fair value gains or losses are excluded from dividend computations.

Building on this, the company said that its billed receivables show “consistent collection performance,” supported by close coordination between its credit team and tenants to ensure timely payments.

Not a conclusive assessment

“The opinion or assessment of persons not affiliated with the Company and not privy to its operations should not be considered as a conclusive assessment of the financial condition of the Company,” Domingo added.

Reaffirming its stability, VistaREIT highlighted a 6.77 percent increase in dividend payouts in 2024 from the previous year — growth it attributed to “operational strength and prudent financial management.”