Premiere Island Power REIT Corp. (PREIT) has suspended its lease agreement with Siquijor Island Power Corporation (SIPCOR) after the Energy Regulatory Commission (ERC) revoked SIPCOR’s Provisional Authorities to Operate (PAO) for its generating units. The company said the suspension will be in effect until the end of 2025 while both parties assess the future of the arrangement.

The company said the Board of Directors approved the decision on November 14, noting that the move follows regulatory developments affecting SIPCOR’s operations. No additional information was provided in the disclosure.

PREIT reported that the suspension covers the April 11, 2022 lease agreement, as amended, and temporarily relieves SIPCOR of rental obligations. Despite this, SIPCOR is required to continue maintaining the leased property throughout the suspension period. PREIT said the arrangement provides time for both parties to determine whether to proceed with the lease after December 31.

PREIT added that the suspension allows for proper evaluation of its lease portfolio amid changes in SIPCOR’s operating status.

What factors do you think companies should weigh when assessing whether to continue or suspend lease agreements affected by regulatory actions?

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