REIT listing for PLDT’s data center arm may draw investor interest — analysts
By Ashley Erika O. Jose, Reporter
A REAL ESTATE investment trust (REIT) listing for the data center arm of PLDT Inc. is expected to draw interest from investors, according to analysts.
PLDT is in talks to sell up to 49% of its data center business to Japan’s Nippon Telegraph and Telephone (NTT), but it is also open to a REIT listing if the valuation targets are not achieved.
“Business is business. If they cannot meet the target objective of valuation for PLDT, we have to talk to others who offer high valuation. If we cannot get the values from equity investors, let’s say we decided to keep control, we might get a REIT listing for the data centers,” PLDT Chairman and Chief Executive Officer Manuel V. Pangilinan said during the company’s financial briefing on May 9.
Sought for comment, Chinabank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message: “A data center REIT listing on the PSE would be the first of its kind in the local market, so that novelty factor alone will draw the attention of investors.”
“There’s also a potentially good investment story given the secular tailwinds for the digital infrastructure industry, foremost of which are the growth of artificial intelligence and the expansion of the digital ecosystem,” he added.
To date, PLDT, through its subsidiary ePLDT, has 11 data centers, including the 50-megawatt hyperscale data center in Sta. Rosa, Laguna, which is expected to be completed by July.
REITs are companies that own real estate-related assets, generating income from properties like land, buildings, and real estate securities. They are created to provide an alternative to illiquid real estate investments, offering a liquid asset class. Publicly traded property stocks, such as REITs, enable investors to access real assets.
“PLDT’s data center REIT could be a good option for investors seeking exposure to the growing data center market,” First Grade Finance, Inc. Managing Director Astro C. del Castillo said in a Viber message.
The Philippines is seen as an attractive location for hyperscalers as the country is strategically positioned to take advantage of the transitions in the Southeast Asian region.
For Mr. Del Castillo, a possible REIT listing is expected to generate interest due to the growing data center demand.
“The data center demand is growing and this bodes well for stable and potentially growing income for investors. Another reason would be PLDT estimates the data center business to be worth over $1 billion. REITs are known for offering good dividends, so investors could benefit from a share of that value,” he said.
However, he also said, since this would be the first REIT listing of its kind in the Philippines, investors might be cautious about the track record and stability of payments to investors.
High interest rates are also a factor to consider and may sway investors due to the current conditions, Mr. Colet said.
“At the end of the day, investors will focus primarily on the total return, especially the dividend yield, that a REIT can deliver to shareholders. Since we are in an elevated interest rate environment, investors will demand premium dividend yields, which will lower the IPO (initial public offering) valuation of a REIT,” he said.
Last year, PLDT said it was targeting to grow its data centers by up to 25% with a planned expansion in Luzon.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.
