Specialty Finance Bolsters CIRI’s Investment Portfolio

Specialty financeDividends for CIRI shareholders are generated by the investments that the company has made over its 45 years of existence. While the investment portfolio changes some each year, reflecting shifting economic priorities and market trends, it is anchored by real estate, energy, infrastructure, government contracting and investment securities.

These business segments reflect the expertise of the CIRI Board of Directors and management team. They are industries that CIRI knows well and in which the company has cultivated expert partners.

When considering new investments, the challenge is weighing the opportunity for a positive return to benefit shareholders against the potential risks that could negatively impact the investment. In the last couple of years, the CIRI management team has tackled this balancing challenge with a new investment strategy, one that leverages both the company’s experience and its network of expert partners: specialty finance.

Specialty finance is a term applied to a new line of business CIRI is developing in which the company makes debt investments that are ultimately backed by large, existing industry assets with which CIRI is familiar. Through the specialty finance business, CIRI avoids many of the risks inherent with being a new project developer or owner while continuing to earn attractive returns.

“This type of investing is less risky than being an equity investor in projects while providing a better risk-adjusted return that, in many cases, approaches the level of returns an equity investor can expect to receive,” Chief Financial Officer Stig Colberg told CIRI shareholders at a recent Information Meeting.

CIRI’s foray into specialty financing began with a loan backed by the Briscoe Wind Project, a 150-megawatt wind farm in Texas. CIRI lent money to Capital Dynamics, Briscoe’s owner and one of CIRI’s partners in another project, the Middletown Energy Center. The loan is secured by 100 percent of the equity in the wind farm. Other recent specialty finance investments include a loan to CIRI’s long-time partner in the hospitality industry, Woodbine Development Corp., which is backed by a hotel in Dallas, Texas, and a debt investment secured by stock in Iceland’s fastest-growing telecom company.

CIRI’s prime targets thus far have been in the infrastructure, real estate and energy arenas.

“We are confident that adding specialty finance as an important piece of the company’s overall portfolio of assets and businesses will help grow net income, increase shareholders’ equity and ultimately achieve our objective of steady and growing dividends for CIRI shareholders,” Colberg said.