MANILA, Philippines — SM Investments Corp., the country’s most valuable conglomerate, has gained foothold in the real estate investment trust space with a deal to buy close to 29 percent of renewable energy property landlord Citicore Energy REIT Corp. (CREIT) for about P5 billion.
Ahead of the much-awaited public listing of the REIT to be formed by property arm SM Prime Holdings Inc., industry sources confirmed to the Inquirer that SMIC is ready to sign a deal to buy the shares in CREIT held by Citicore Renewable Energy Corp. (CREC), which is part of the Megawide group led by businessman Edgar Saavedra.
CREIT, which listed on the local bourse in 2022, was valued by the stock market at P18.4 billion as of Tuesday. This implies that SMIC will buy shares at close to the current market price.
The parties are expected to formalize their agreement any time soon, said sources familiar with the deal.
The deal has been arranged by BDO Capital Investment Corp., the sources added.
Green asset portfolio
The buy-in deal gives the SM conglomerate, already the dominant player in banking, retailing and property development in the country, exposure to renewable energy-themed real estate.
READ: Renewable energy brings new flavor to REIT market
Part of the sustainability commitments of the local business powerhouse is to focus on “practical sustainable solutions on water, waste and energy management to promote resource conservation and environmental protection,” according to its website.
CREIT has 7.16 million square meters of green asset portfolio with 100-percent occupancy rate, mostly solar farms leased to its REIT sponsor CREC. It is the largest renewable energy REIT landlord in the country to date.
The properties leased by CREIT have a total appraised value of P14.2 billion as of Sept. 30, 2023, based on the valuation reports issued by Cuervo Appraisers.
CREIT dividends
Total dividends declared by CREIT out of 2023 net income amounted to 19.9 centavos per share, 9 percent higher than the previous year’s payout of 18.3 centavos per share.
For its part, CREC—which is also set to go public but deferred the launch of its offering—has more than 5 gigawatts of project pipeline in varying stages of development.
The deal allows CREC to recycle money for its new projects while remaining as the single largest stockholder of CREIT, owning about a third of the latter.
READ: BIZ BUZZ: Blue chip to take a bite of CREIT
Biz Buzz earlier reported that a blue-chip company is in the thick of discussions to buy into CREIT as part of efforts to build up its green portfolio.
The entry of SMIC into CREIT comes ahead of the $1-billion public offering of a REIT company to be sponsored by SM Prime Holdings. INQ