CREIT, PH’s First Renewable Energy REIT, Makes Successful Debut

Citicore Energy REIT (CREIT) Corp., the Philippines’ first renewable energy real estate investment trust (REIT) company, made its successful and hotly anticipated stock market debut last Tuesday, as reported by PhilStar.

CREIT ended the day up by 11.37% from its initial offer price of P2.55 per share, including gross proceeds from the initial public offering (IPO) of P6.4 billion and the over allotment option. It outperformed the main index, appealing to a wide range of investors.

Manuel Lisbona, president of PNB Securities Inc., told the news outlet that investors are keen on CREIT’s function as a green investment option since it provides solar energy to its lessees, which in turn provides significant savings and stable rental income to the company. 

The demand for the company was so substantial that it had to postpone its listing day to process refunds to investors who placed orders but couldn’t be allocated with shares once demand exceeded the offer’s size. CREIT’s listing period ended on February 8. 

CREIT is currently the sixth REIT company in the country and the first non-office REIT. It’s the only renewable energy-focused REIT at the moment, with proceeds from its sale of primary shares allocated to buying property assets in South Cotabato and Bulacan to be used as solar power plants by Citicore Group. 

The Rise of REITs

Carlos Dominguez III, secretary of the Department of Finance (DOF), said during the company’s listing ceremony that CREIT’s listing brings the total market capitalization of REITs to almost P300 billion. 

He also noted that Philippine REITs now constitute 1.4% of the national gross domestic product (GDP), according to an article published by The Manila Times.

Dominguez believes that REITs are a powerful financial tool that has the potential to aid the country’s financial recovery since it offers regular Filipinos an appealing and reliable investment option. 

CREIT’s inclusion also expands the possibility of REITs to go beyond commercial real estate holdings, adding that it’s an ideal example of how the government and private sector can work alongside each other to address climate change issues and improve energy security.

According to BusinessWorld, real estate professionals and top company executives expect to see a bullish REIT market ahead. The article states that REIT executives believe the Philippines has the potential to become one of the largest REIT markets in the Southeast Asian region, especially after launching five successful IPOs amid the pandemic. 

Kevin Andrew L. Tan, president and chief executive officer of MREIT Inc., predicts that there will be a total of almost five or six more REITs that will enter the market in the coming months or years. 

At the moment, there are six listed REITs, namely: CREIT, Ayala Land’s AREIT Inc., Filinvest’s FILREIT, DoubleDragon Properties’ DDMP REIT Inc., Megaworld’s MREIT, and RL Commercial’s RCR. All of these currently listed REITs, save for CREIT, are mainly focused on the office and commercial real estate sector. 

The Appeal of REITs

Since debuting almost two years ago, Philippine REITs have raised almost P76 billion, which will be reinvested into the development of the country’s capital market and infrastructure projects. The remarkable market capitalization of these properties reflects their value and significance among the public sector. 

REITs have offered investors an advantageous way to diversify their portfolios. The market’s relative success is also symptomatic of a shift in buyer priorities, according to data revealed at Lamudi’s Academy’s year-end round-up, which noted that buyers are increasingly interested in more functional investments. 

These investments include properties in areas within central business districts (CBDs) and near mass transportation hubs, where most office REIT properties are located. 

With the economy’s reopening and increasing vaccination rates, the property market is set to recover within the year thanks to REITs, together with the rise of data centers and IT-BPM firms, the return of POGO facilities, and the completion of infrastructure projects

Sources: PhilStar, The Manila Times, BusinessWorld

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