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Philippines’ first solar power REIT makes hot stock market debut

Citicore Energy REIT opens 9% higher and plans expansion beyond solar

Philippines' first solar power REIT makes hot stock market debut

The Philippines‘ first real estate investment trust (REIT) focused on renewable energy made its debut on the country’s stock exchange Tuesday, with its shares soaring by as much as 15.3%.

Citicore Energy REIT opened 9% higher, even as the benchmark Philippine Stock Exchange index opened in the red.

The company, which owns parcels of land that it rents to solar power operators, is banking on the Philippines’ push toward renewable energy. The country aims to reduce its reliance on coal.

Citicore Energy REIT raised 6.4 billion pesos ($124 million) from its initial public offering. The offer met “overwhelming” demand, particularly from retail investors, which delayed the listing originally scheduled for last Thursday, according to the company.

The company derives its revenue from lease payments and plans to use part of its IPO proceeds to buy more parcels of land. Citicore Energy REIT forecasts dividend per share yields of 7.0% and 7.4% this year and next, respectively.

The possibility of higher interest rates could weigh on REIT share prices, but the company plans to acquire new assets to improve its value, executives said Tuesday after the listing ceremony. The company’s portfolio currently generates 145 megawatts of solar power, but it is evaluating 1,500 MW of potential projects in the next five years.

“We are also open to look into other renewable energy sources like wind, run-of-river hydro,” Citicore Energy REIT Chief Executive Oliver Tan told reporters.

The Philippines’ energy department has awarded hundreds of renewable energy contracts since 2016, and in 2020 declared a moratorium on new coal power plants.

The government aims to increase the share of renewables as part of the country’s energy mix to 50% by 2040. Renewable energy made 29.1% of the country’s installed capacity in 2020, energy department data showed.

Citicore Energy REIT is the sixth real estate investment trust to list on the Philippine Stock Exchange since rules for the new asset class were finalized two years ago. The portfolios of REITs that listed earlier are dominated by offices that host call centers and China-centric online casinos.

REITs have increased fundraising activity on the stock market, which saw a record 234.48 billion pesos raised last year.

Citicore Energy REIT is backed by the same group that controls Megawide Construction, which started mainly as a condominium builder before venturing into larger infrastructure projects like airports.

The company is the third to list this year, after Figaro Coffee Group and residential real estate developer Haus Talk. Upcoming IPOs include Bank of Commerce, the banking arm of beer-to-infrastructure conglomerate San Miguel; food and beverage kiosk operator Balai ni Fruitas; and solar power company Raslag.

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