Wind parks REITs’ new market niche

Real estate investment trusts (REITs) have discovered a new market niche: sale of land for wind parks, a Pari daily’s inquiry shows. With the decrease in land prices funds started looking for additional income sources. The law does not allow REITs to build renewable energy plants, CEOs said. However, companies can improve the plots and sell them at higher prices to potential investors in renewable energy sources.
Activity
Advance Terrafund has sold land to would-be investors in wind parks, CEO Radoslav Manolov told the Pari daily. The properties in the company’s portfolio are suitable not only for wind parks but for solar plants, too, he added.
Decision
The Financial Supervision Commission recently licensed Elarg Wind as a servicing company of Elarg Agricultural Land Opportunity Fund REIT. Elarg Wind was set up to survey land plots and establish if they can be used for construction of wind or solar parks, CEO Stoyan Malkochev said. The aim is to raise the price of suitable land and sell it to investors that will build such projects.
Policy
We have not considered such projects so far and we are not going to revise our policy in the short term, Agro Finance REIT CEO Desislava Yordanova said. Although the company is specialised in land rentals, it is open to any new ideas.
Price
The four funds included in the BGREIT index are owners of a total of 74,053 ha of agricultural land. Elarg has acquired the plots at an average price of 2,190 leva/ha, Advance, at 2,480 leva/ha. Agro Finance has paid 2,808 leva/ha and Bulland Investments, 2,805 leva/ha.
Deals
If the plots are found suitable for renewable energy projects, the price can jump more than ten-fold. We recently sold nearly 0.7 ha for such a project and the price reached 25,000 leva/ha, Radoslav Manolov said. The sales price depends on how suitable the plot is for investment and can top 15 times the purchase price, Stoyan Malkochev said.