Filinvest REIT signs lease expansion deal with NZ-based company

Filinvest REIT [FILRT 3.00, down 1.0%; 48% avgVol] [link] revealed that it signed a lease expansion agreement with Building Engineering and Design Co. (BEDC), an engineering company based out of Auckland, New Zealand. FILRT said that BEDC currently occupies 1,724 square meters of gross leasable area (GLA) with FILRT, and that the expansion will double this number to 3,500 square meters of GLA “before year-end”. BEDC has grown its PH-based presence from 40 employees to 400 over the past three years.

MB bottom-line: This signing comes at an opportune time with the specter of the POGO ban looming over commercial lease rates. BEDC is the kind of long-term client that REITs would die for, and it looks like they’ve signed this expansion thanks in no small part to the relationship that FILRT seems to have built with the New Zealand government. I’m not sure what the connection is, whether it’s some link through the embassy or just happenstance, but whatever it is, they’ve managed to monetize it somehow. FILRT’s occupancy rate is dismal (~79% as of end-Q1), so the glass-half-full analysis would be that they’ve got plenty of inventory left for the team to sell to similar potential clients. This is the tantalizing potential of FILRT. For as much as I deservedly bash this company for its tendency to gaslight shareholders and ignore its own faults, the pure potential of organic growth should it figure this whole REIT game out is considerable. Don’t get me wrong, I don’t think that it’s going to happen, but FILRT shareholders are basically missing out on P170 million each quarter in lost lease revenue due to FILRT’s inability to maintain the 95-98% occupancy level that the other top-tier commercial REITs are able to deliver. That’s a huge amount of potential “growth” that wouldn’t cost FILRT a single peso to build or acquire. I’m not saying that it’s easy, but what one man can do, another can do (don’t blame ME if you get inspired). Can FILRT kill the bear?

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