We now have more information on the upcoming IPO of PREIT, which will become the Philippines’ 8th listed REIT. Their website is now live as well: www.preit.com.ph

Some figures to consider:

-to list 1.4B common shares at P2 per share

-proceeds will total P3.09B

-IPO to run from Nov. 25 to Dec. 2 with a listing date of Dec. 12 (dates are all tentative)

-rental income will be the higher of either the guaranteed base lease or the percentage of revenue from electricity sales of its power plant tenants

-estimated dividend yield is 7.2% for 2023

I find PREIT underwhelming to be honest. Its initial income generating properties are the 21.2 MW power plants in Siquijor and Camotes (Cebu) islands. Note that these are fossil fuel power plants and the world is rapidly shifting to renewables. In the PSE, one can choose to invest in CREIT, ACEN, SPNEC, RASLAG and more. The Villar Group (through Prime Asset Ventures) is obviously aware of this because they plan to use the proceeds to build 14 solar farms in Luzon – Bataan, Camarines, Pangasinan etc. Do note that none of these solar farms are operational at the moment; 3 are under construction and the rest are in pre-development.

It is interesting that the Villar Group is establishing thematic REITs with PREIT becoming the power and infrastructure REIT and VREIT (listed earlier this year) being the office / mall REIT. I would have preferred for them to bolster VREIT’s assets and ultimately transform it into a large, diversified REIT instead.

Despite the underwhelming nature of its initial assets, the strong pipeline of 14 solar farms that will be infused into PREIT in the future is something to look forward to. PREIT and CREIT (Citicore) will now be in a race to execute their plans and investors will be watching as to who will emerge as the better, more “powerful” REIT. More importantly, I will be keen to see who can infuse assets faster and therefore increase their dividends.

It wouldn’t be far-fetched for the Villar Group to infuse their tollroad, water and telecom assets into this REIT in the future or they could simply choose to keep PREIT as a purely power-related REIT as well – who knows.

At this point, I will not be investing in PREIT’s IPO – it has potential, but I prefer to wait and see if they can execute. Besides, with the current depressed stock prices, we have better, higher quality REITs that are essentially a bargain to buy. This blog will continue to keep an eye on PREIT though, along with the other REITs, and track their growth in terms of assets and dividends.