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Stock Commentary

CREIT FY23 profit: P1.4-B (up 12%)

Merkado Barkada
CREIT FY23 profit: P1.4-B (up 12%)

Citicore Energy REIT [CREIT 2.88, up 1.1%; 134% avgVol] [link] posted an FY23 net income of P1.40 billion, up 11.6% from its FY22 net income of P1.25 billion, powered by CREIT’s “strong guaranteed lease base” and new contributions from FY23 acquisitions from its parent company, Citicore Renewable Energy Corp. (CREC). Revenues were up 31% to P1.8 billion, with P1.59 billion coming from CREIT’s guaranteed base leases and P33.9 million coming from its variable lease profit-sharing clauses. CREIT said that its financing cost increased 1660% to P292 million, due mainly to coupon payments on its recent green bond issuance. CREIT used the proceeds of the green bond issuance to acquire properties from CREC.

 

MB bottom-line: Another great year for CREIT, and another demonstration of the power of its unique lease configuration that allows the management team, with a very high level of certainty, to declare dividends in excess of the 90% minimum of distributable income required by law. While there are a few REITs that have a similarly deep pipeline of potential future injections, CREIT stands alone in terms of its willingness to identify and map those injections over the long term. At an analyst briefing yesterday, the CREIT management team confirmed that SM will get representation on CREIT’s board relative to its shareholding, and that it would blend the dividend for the variable lease income in with the fixed lease income going forward. CREIT said that its FY23 acquisitions contributed 24% of its FY23 revenues, and that the newly deposited properties increased CREIT’s debt headroom to approximately P9.2 billion. 

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