Turning Silicon Valley dreams into REIT

The Gotianun family of Filinvest Land, Inc. (FLI) would take annual treks to California in the 90s and the vast residential and commercial real estate landscape in Silicon Valley made them dream of a world-class office complex to serve as the choice address for technology companies back home.

Today, this dream lives on in Northgate Cyberzone in Filinvest City, Alabang — one of the first Philippine Economic Zone Authority (PEZA) accredited IT Parks in the Philippines. FLI subsidiary Cyberzone Properties, Inc. (CPI) manages the 18.7-hectare property and is the biggest provider of office spaces in South Metro Manila.

Northgate was patterned after the sprawling campus offices of many startups and global technology firms. From my trips, I saw the large floor plate and side core office buildings which we introduced to the Philippines and has since become the industry standard,” said FLI President Josephine Gotianun-Yap. North Cyberzone is now a thriving community of business process outsourcing (BPO) companies and technology providers.

Thanks to the family’s foresight, FLI made a deliberate strategy to focus on the office segment of the property market. “We are one of the pioneers in this segment, and we grew with the BPO industry since its infancy. It’s an industry that has brought employment to over a million Filipinos and a key driver to our country’s GDP,” said Mrs. Gotianun-Yap.

Pioneer in providing homes to BPOs

One of the first built-to-suit (BTS) commercial properties in the Philippines was completed for a BPO of a multinational bank with 18,000 sqm of space, the largest BTS at the time.

The strategy has so far served FLI well. Amidst the COVID-19 global pandemic, CPI’s revenues still climbed 8% to P3.12 billion in 2020 versus the previous year, thanks to the resilience of the country’s IT-BPO sector. In the last decade, revenues from this market segment have steadily given CPI a steady cashflow, with a compounded annual growth rate of 20%.

FLI believes Northgate Cyberzone has been attracting top-notch tenants due to its high-quality office buildings that were rated Grade A by global real estate firm JLL Philippines, as well as FLI’s reputation of over 50 years as a trusted developer. The properties also offer various supporting amenities, and rental rates that FLI said are competitive against those in the central business districts of Makati and Bonifacio Global City in Taguig.

Sharing the dream

To share the success of the Gotianuns’ Silicon Valley dream and unlock the value of the property for potential investors, FLI selected 16 office buildings clustered in Northgate Cyberzone, and one office tower in Cebu Cyberzone located in the gateway to Cebu IT Park, Lahug, Cebu City, to be put into a real estate investment trust (REIT) portfolio.

Subject to regulatory approval, CPI will be renamed into Filinvest REIT Corp., according to the Registration Statement CPI filed with the Securities and Exchange Commission (SEC) last March 25, 2021.

Based on the registration statement filed by CPI, of the occupied gross leasable area, 88.4% is occupied by prime multinational BPO companies with 8.8% occupied by traditional and retail tenants while POGO tenants account for only 2.8%, as of March 31, 2021.

The portfolio also includes LEED Gold-certified buildings awarded by the US Green Building Council which FLI believes is among the sustainability features sought after by multinational BPOs today. The cooling system of Filinvest REIT Corp.’s buildings in Northgate Cyberzone was totally replaced five years ago and turned into the country’s largest district cooling system that reduces carbon emissions and energy consumption – a result of Filinvest’s partnership with Engie, a world leader in developing sustainable technology solutions.

From hopes of bringing the idea of Silicon Valley home, the Gotianuns now have a new vision for the future. “In 2021, we are moving forward and embarking on new initiatives: REIT, logistics and e-commerce warehouses, and co-living spaces. These initiatives address new trends that will define our future,” said Mrs. Gotianun-Yap.

BPI Capital Corporation (BPI Capital) acts as a Joint Global Coordinator and Bookrunner for the initial public offering (IPO), together with UBS AG Singapore Branch, who acts as International Bookrunner for the international tranche of the institutional offer of the IPO. BPI Capital and China Bank Capital Corporation (China Bank Capital) both act as Local Lead Underwriters, while First Metro Investment Corporation (First Metro) and SB Capital Investment Corporation (SB Capital) both act as Local Co-Lead Underwriters. BPI Capital, China Bank Capital, First Metro and SB Capital will underwrite the domestic tranche, and together with the International Bookrunner, will underwrite the respective tranches of the IPO.

For more information on CPI and its IPO, please visit http://www.cyberzoneproperties.com for a copy of the preliminary REIT Plan.

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A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE SECURITIES MAY NOT BE SOLD NOR OFFERS TO BUY THEM BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT IS RENDERED EFFECTIVE. THIS COMMUNICATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR BE CONSIDERED A SOLICITATION TO BUY.