Citicore Energy REIT Corp. (CREIT), the Philippines’ pioneering renewable energy real estate investment trust (REIT), has capped off a remarkable year in 2023. The company reported a stellar performance across key metrics, showcasing the growing confidence and potential within the renewable energy sector.
A Surge in Earnings and Portfolio Expansion:
CREIT’s financial performance in 2023 paints a picture of a company firing on all cylinders. Compared to 2022, earnings jumped by a significant 12%. This translates to a substantial increase in profits, demonstrating the company’s operational efficiency and ability to generate strong returns.
Furthermore, CREIT’s core asset base, its green portfolio, witnessed a remarkable expansion. Since its initial public offering (IPO) in 2022, the portfolio has grown by a staggering 4.3 times. This aggressive expansion strategy signifies CREIT’s commitment to capturing a larger share of the burgeoning renewable energy market in the Philippines. The acquisition of new properties translates to a wider reach and diversification of income streams, potentially mitigating risks associated with a limited asset base.
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Photo by Jon Manosca from pexels.com The Philippines boasts a dynamic real estate market, attracting both domestic and international investors. Rental properties offer a compelling option, promising steady returns through rental income. This post explores rental yields in the Philippines, compares them to yields offered by Philippine Real Estate Investment Trusts (REITs), and analyzes the advantages and disadvantages of each investment approach.
Data from Global Property Guide (https://www.globalpropertyguide.com/asia/philippines/rental-yields) highlights the concept of rental yield, which essentially measures the annual return on a rental property. The Philippines exhibits a positive trend, with an average gross rental yield of 5.19%. This translates to an attractive return on investment, potentially making rental properties a lucrative venture. However, it’s crucial to remember that gross yields don’t account for operational expenses like property taxes, maintenance, and management fees. Factoring in these costs reduces the net yield, typically by 1.5% to 2%.
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Financial Independence Retire Early (FIRE) is a movement that emphasizes saving and investing a significant portion of one’s income in order to achieve financial independence and the ability to retire early. The goal of FIRE is to reach a point where one’s investments generate enough passive income to cover their living expenses, allowing them to leave the traditional workforce and pursue other interests, such as traveling, starting a business, or pursuing a passion.
To achieve FIRE, individuals typically focus on minimizing their expenses, maximizing their income, and investing the difference in a diversified portfolio of assets, such as stocks, bonds, and real estate. They also aim to reach a high savings rate, often aiming to save 50% or more of their income.
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I attended the webinar sponsored by COL Financial this afternoon and it was great to hear updates regarding AREIT straight from the CEO, Carol Mills. Fortunately, COL shared it on Youtube:
The highlight, of course, is AREIT’s planned asset infusions for next year. This includes a solar farm in Zambales; Seda hotels in Cebu and Palawan; the Holiday Inn in Makati; office building Ayala Triangle Gardens T2; and shopping malls Greenbelt 3 and 5. This is by far the most diverse set to be infused in a single year and pretty much includes all 4 traditional properties: office, retail, hotel and industrial.
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AREIT’s next asset infusion is a 276 hectare land in Zambales which will be leased to an ACEN Inc. solar farm subsidiary. With this move, AREIT is positioning itself to be a truly large and diversified REIT with properties that include offices, hotels, malls, factories and now, a solar farm. As a long term investor in AREIT, I am confident that their diverse collection of income generating properties will translate to a stable and increasing stream of quarterly dividends. To note, their latest 3Q2023 dividend of P0.55 is nearly double the initial P0.28 dividend given last 2020. For income focused investors, this is is gold standard. It is even more impressive given the challenges brought on by the pandemic and it shows that high quality real estate coupled with good management will always be a winner.
