COVER STORY
Having renewable energy REITs also allows the public to be part of the green revolution and for more diversification . We believe that our unique asset class is very compelling .
Q9
Because the renewable energy REIT ’ s business model and cash flow are different from traditional REITs , how would you assure unitholders of continued dividends down the line ? With ESG advocacies still relatively young in the Philippines , what is your strategy to assure an attractive yield ?
Unlike the traditional property REITs in the market , we structured CREIT to have 95 % distributable income . We also ensure that each investor is protected via the guaranteed base lease which is independent of the operating performance of the lessees while enjoying upside income potential via the variable lease .
CREIT also enjoys a superior 20.82 years of Weighted Average Lease Expiry ( WALE ) unlike other listed REITs which only range from 5 to 7 years . Our lessee ’ s average offtake contract term is 7 years , which is longer than WALEs in the market . CREIT enjoys a stable occupancy rate all year round unlike traditional office REITs , which are inherently exposed to vacancy risks as tenants come and go .
CREIT ’ s listing expands the REIT market to go beyond commercial property holdings and opens up the capital markets to other REIT asset classes . This is aligned with the country ’ s effort to achieve climate ambitions and accelerate the transition to cleaner energy .
Based on estimated earnings and dividends for 2022 and 2023 , projected dividend yield at IPO price of Php2.55 ( US $ 0.049 )/ share is at 7 % and 7.4 % respectively . Earnings are expected to grow as CREIT acquires new income-generating renewable energy assets every year from its Sponsor .
Q8
As the pioneer for renewable energy REITs in the country , do you see other REITs following this move ?
What I can say is market players are willing to adopt a more liberal outlook , especially after the successful maiden debut of CREIT . We believe there is room for renewable energy . It will benefit all stakeholders and public investors will have more choices .
“ The market expects more power and infrastructure-related REIT listings to follow . This will provide investors with wider choices of REIT products outside of the traditional office and mall REITs .“
Q10
The Philippines just launched its REIT regime and we are seeing a lot of activity in the country ’ s REIT space since then . Do you have any policy recommendations that could potentially improve or expand the Philippines ’ young REIT market ?
That is a good question . We do appreciate our regulators . But there is a lot of improvement that needs to be done . Basically , we need to open up the REIT market to energy and infrastructure products . This is based on our experience after going through the CREIT listing .
There is a need to expand the recognition of revenue to energy because now , it is only limited to rental revenue . There is a strong case to expand this recognition to include , for example , the sale of electricity , of toll fees , or of airport fees . This will ultimately have to be amended .
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