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Stock Commentary

Citicore Energy REIT IPO pushed into early 2022 to avoid scheduling overlap

Merkado Barkada
Citicore Energy REIT IPO pushed into early 2022 to avoid scheduling overlap

(Update 1, 10:46 a.m.) Many MB readers have reached out to ask questions about the Citicore Energy REIT [CREIT 3.15 pre-IPO] IPO after the dates for its offer period and listing in its preliminary prospectus came and went without any word from the PSE or the company.

I got into contact with Megawide [MWIDE 5.16 0.19%], CREIT’s parent company and sponsor, and tried to learn more about what has caused this delay.

According to MWIDE, the scheduling of IPOs (and other equity-raising events like SROs and FOOs) is handled by the PSE, and CREIT’s preliminary dates were pushed back a couple of months by the PSE to prevent its offering from overlapping with another "dividend play offering."

When I asked MWIDE about how the new dates might hurt or help their process, the company actually considered the change to be a positive one, noting that December only has two real working weeks due to all the holidays, and many fund managers are not in the office during that span.

MWIDE said that the new dates will allow it an uninterrupted book-building process, which is important considering the IPO’s international tranche. MWIDE also said that the delay will allow it more time to conduct “pre-deal investor education” to help teach investors about CREIT’s offering, “given that CREIT is the first of its kind.”

The new timetable calls for CREIT’s final pricing on January 26, with an offer period between February 2 and February 8, and an IPO listing on February 17. These dates have been added to the MB Market Calendar and the MB IPO Tracker.

MB BOTTOM-LINE

First off, thanks to the MWIDE team for responding to my inquiries. They were very open and accommodating, and I appreciate having had the chance for a little back-and-forth with them on the reasons for the IPO delay.

While I do not agree with the PSE’s continuing curation of the listing schedule, I have to give credit to the MWIDE/CREIT team for taking the delay as an opportunity to conduct additional investor education on their offering.

While CREIT is a REIT and will pay quarterly dividends just like our other REITs, it’s wildly different in terms of the income-generating assets that investors will rely on to harvest dividends, and these differences create interesting trade-offs and opportunities when considered alongside its BPO-centric REIT peers.

I recommend for anyone interested in this IPO to read the prospectus (link here).

This is the PSE’s first REIT based on income from renewable energy real estate leasing, and everything about the tenants, leases, and income streams, is dramatically different from the typical commercial office space REIT plan.

I look forward to the investor education material that will be provided and I hope that it will be made available online for MB readers, but until then I cannot understate the importance of taking the time to read CREIT’s plan to get a fuller understanding of what’s going on behind the dividends.

Make no mistake: while I am inclined to be excited about REITs and about new REIT models (like this one) in particular, please do not take this excitement to be a blanket recommendation of CREIT or of REIT stocks in general.

Every investor’s situation is different, and what might be great for me and my family, with all of my context, might not be that great for you and yours. It goes both ways.

That being said, I plan to cover this REIT extensively in the new year as the IPO approaches, so if you share my interest, stay tuned for more coverage.
 

Editor's note: The headline and paragraphs 3 and 4 of the article have been amended.

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Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.
Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

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