Corporate News

FLI unit plans P5-B bond issue

Date issued: April 17, 2017

A UNIT of Gotianun-led Filinvest Land, Inc. (FLI) is set to tap the debt market to finance the development of more office projects amid strong demand from the business process outsourcing (BPO) industry.

Filinvest Land, Inc. is developing several projects this year.

Cyberzone Properties, Inc. (CPI) is floating P5 billion in bonds, with an oversubscription option of up to P1 billion, Philippine Rating Services Corp. (PhilRatings) said in a statement.

The bonds may be issued in tenors of five and/or up to 10 years.

Proceeds from the sale will be used to partially fund the capital expenditure requirements of the CPI’s existing buildings and buildings under construction.

Some of the buildings under construction include Vector Three, Megablock Parking, Filinvest Axis Towers 1 to 4, and Filinvest Cebu Cyberzone Towers 2 to 4.

PhilRatings assigned a PRS AAA rating -- the top credit score given by the agency -- on the proposed bond issue, which means the debt is of the “highest quality with minimal credit risk.” The rating was also assigned a stable outlook in the next 12 months.

In assigning the highest debt rating, PhilRatings said it considered the “exceedingly competitive and focused office portfolio which has been consistently growing while maintaining high occupancy rates; supportive economy and industry outlook, backed by resilient and growing demand; and synergies with the Filinvest Group, including an established brand name and track record, along with a highly experienced management team.”

PhilRatings also looked into the “consistently growing profitability with strong margins; and more than ample liquidity in relation to debt servicing requirements.”

CPI owns and manages office buildings which cater mainly to technology-based companies, including those engaged in BPO.

FLI operates 21 buildings totaling 312,000 square meters (sq.m.) of gross leasable area (GLA), with CPI accounting for about 77% of FLI’s total GLA as of end 2016.

At the close of 2016, the company had a total GLA of 239,823 sq.m. in its operational buildings, all of which are almost fully leased out. The size is expected to grow to 493,720 sq.m. by 2020 as CPI completes buildings currently under construction and for future construction.

With annual revenues of $25 billion, the BPO industry is one of the key pillars of the Philippines’ above-average economic growth.

Filinvest Land earned a record P5.35 billion last year, 7% higher from the P5.01 billion booked for 2015. Revenues rose 7% to P19.50 billion from P18.30 billion on the back of a 15% jump in rental revenues.

FLI is a subsidiary of Filinvest Development Corp., the holding firm for the Gotianun family’s businesses in banking, hotel, power, and sugar farming and milling.

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