Inside the boardroom with CREIT president Oliver Tan

RE: CREC IPO

Merkado Barkada (MB): Congratulations on finally getting CREC to the market! It must feel good to be so close to being able to focus entirely on CREC’s development pipeline.

Oliver Y. Tan (OYT): Thank you! 

MB: There are no other power generation companies with a dedicated REIT recycler (AREIT/ACEN is the only other, but it’s not a clear pipeline), and there are certainly no other RE companies that have as clear a long-term development strategy with a REIT subsidiary. I looked through the prospectus, and the CREIT angle was mentioned but the value of CREIT to CREC wasn’t explicit. How has the built-in capital recycling machine of CREIT been received by potential investors? Was it a choice to downplay the CREIT mechanism?

OYT: Not really a choice to downplay the CREIT mechanism but rather the lens of focus is on CREC, the IPO Issuer. We felt anyhow that the capital recycling machine of CREIT was extensively discussed in CREIT’s IPO prospectus in 2022. While the investor profiles of CREIT and CREC are unique and distinct (one is more of fixed income while the other is more of growth and capital gains), CREIT and CREC business models are complementary and feed each other. CREIT is a renewable energy property landlord while CREC is a renewable energy developer and power generation company. As CREIT acquires more land, its leasable area and rental income grows, and CREC has more land to develop into solar/wind farms, and as CREC develops more solar/wind farms, it has more renewable energy generating assets to feed into CREIT to grow CREIT’s leasable asset portfolio.

MB: Was the configuration of CREIT and CREC understood? Was the role that CREIT plays in CREC’s development pipeline well received?

OYT: The built-in capital recycling machine was very well received by the investors, because of CREC’s clear and visible pipeline projects and development capabilities (we are building and commissioning on average 1GW of new solar farms annually for the next 5 years), and the plan is to inject these 1GW sets of completed solar farms to CREIT every year for the next 5-years, this translates to recurring one-time gains to CREC starting 2024 to 2028, and CREC can