Citicore Energy REIT Corp. (PSE: CREIT), the country’s first energy REIT, is powering up its asset portfolio following its successful Initial Public Offering (IPO) last February 22, 2022. Proceeds from Php2.55 billion issuance of primary shares will be used to acquire the Bulacan and South Cotabato properties worth Php1.754 billion and Php753.8 million, respectively.
Bulacan property is a 253,880-square meter parcel of land in San Ildefonso, Bulacan owned by Citicore Solar Bulacan, Inc. (CS Bulacan), which has been operating the solar power plant since March 2016 with an installed capacity of 15MWdc. Bulacan property is located within 30 to 40km radius from the planned CBD township development in the area and the future New Manila International Airport (Bulacan Airport). On the other hand, the 79,997-square meter South Cotabato property is owned by Citicore Solar Cotabato, Inc. (CS South Cotabato), which has been operating the 6.23MWdc solar farm from December 2015.
Upon acquisition, CREIT will be generating leasing income from these properties over a long-term period of 25 years, adding 20% to its total leased area. The two properties will contribute 21% to CREIT’s total lease revenues and bring total operating capacity of all its tenants to 145MWdc from pre-IPO’s capacity of 124MWdc.
The Sponsor – Citicore Renewable Energy Corp. – is pursuing a five-year plan that will ramp up capacity to 780MWdc by 2025, growing more than five times within four years and providing investors with a clear pipeline of projects for possible infusion into CREIT’s portfolio. The Sponsor has also completed the 6.5MWdc AFAB Rooftop PV system and will soon deliver Phase 1 of the Arayat project, before commencing with Phase 2, for a combined total of 114MWdc for both phases. These are targeted to be infused into CREIT upon completion, commissioning, and commercial operations.
These properties were the subject of due diligence and were recommended for acquisition by the Fund Manager, the Citicore Fund Managers, Inc. (CFMI) as well as approved by the Board of Directors during its Regular Board Meeting held last March 9, 2022.
In compliance with the REIT Law and Related Party Transaction Policy of the Company, Cuervo Appraisers Inc. (Cuervo) – an independent accredited appraiser of the Philippine Securities and Exchange Commission – was engaged as a third-party consultant to provide a fair market valuation of the subject properties. BDO Roxas Cruz Tagle & Co. (BDO), an independent external party (IEP), was hired to provide a fairness opinion. The assets were valued using Income Approach adopting the Discounted Cash Flow Method based on a weighted average cost of capital (WACC) using the Capital Asset Pricing Model. The Direct Capitalization Approach was also used as secondary method to cross-check the value of the properties.