A REIT listing for PLDT’s data center unit could attract interest from investors – analysts

By means of Ashley Erika O. Jose, News reporter

According to analysts, a REAL ESTATE investment trust (REIT) listing for PLDT Inc.’s data center division will become a reality. expected to attract interest from investors.

PLDT is in talks to sell up to 49% of its data center business to Japan’s Nippon Telegraph and Telephone (NTT), but is also open to a REIT listing if valuation targets are not met.

“Business is business. If they can’t achieve the intended goal of valuation for PLDT, we should talk to others who offer high valuations. If we can’t get the values ​​from stock investors, let’s say we decided to keep control , we may get a REIT listing for the data centers,” PLDT Chairman and Chief Executive Officer Manuel V. Pangilinan said during the company’s May 9 financial briefing.

Asked for comment, Juan Paolo E. Colet, chief executive of Chinabank Capital Corp., said. in a Viber message: “A listing of a data center REIT on the PSE would be the first of its kind in the local market, so that novelty factor alone will attract investor attention.”

“There is also a potentially good investment story given the long-term tailwinds for the digital infrastructure sector, chief among 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 in July.

REITs are companies that own real estate-related assets and generate income from properties such as land, buildings and real estate securities. They were created to provide an alternative to illiquid real estate investments and offer a liquid asset class. Publicly traded real estate stocks, such as REITs, give investors access to real assets.

“PLDT’s data center REIT could be a good option for investors looking for exposure to the growing data center market,” First Grade Finance, Inc. said. Managing Director Astro C. del Castillo in a Viber message.

The Philippines is seen as an attractive location for hyperscalers as the country is strategically positioned to benefit from the transitions in the Southeast Asian region.

For Mr. Del Castillo, a possible REIT listing is expected to attract interest due to growing demand for data centers.

“Demand for data centers is growing and this bodes well for stable and potentially growing revenues for investors. Another reason would be that PLDT estimates its data center business at over $1 billion. REITs are known for offering good dividends, so investors could benefit from some of that value,” he said.

However, he also said that 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 could impact investors due to current conditions, Mr Colet said.

“Ultimately, investors will focus on the total return, and especially the dividend yield, that a REIT can deliver to shareholders. As we are in a higher interest rate environment, investors will demand premium dividend yields, which will reduce the IPO (initial public offering) value of a REIT,” he said.

Last year, PLDT said it wanted to grow its data centers by up to 25% with a planned expansion in Luzon.

Hastings Holdings, Inc., a part of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., owns a majority interest in Business through the Philippine Star Group, which it controls.