DOUBLEDRAGON Properties Corp. identified its first tranche of REIT assets comprising the leasable properties of DD Meridian Park.
The intended DD Meridian Park (DDMP) REIT will consist of seven buildings with a total area of 248,349 square meters.
The estimated value of the basket of REIT assets stands at P50,889,814,608 and DoubleDragon expects to generate P16,966,604,869 of proceeds from the planned REIT listing representing an offer of 33.33 percent of the selected REIT assets, which is the minimum public float based on the revised REIT listing rules.
All of the proceeds from the listing will be reinvested in the Philippines.
The REIT proceeds will be enough to construct about 450,000 square meters of building floor area which will further significantly increase the leasable portfolio and recurring rental revenues of the company in the near term.
In addition to the seven buildings that will form the first tranche of DDMP REIT, another two more buildings are planned to be infused in the DDMP REIT after about two to three years as these two other buildings are still currently under construction, also located in the DD Meridian Park complex.
The company is preparing to file its REIT listing application with the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) on August 2020 and aims to list DDMP REIT by this year, on October 2020.
DD Meridian Park complex sits on a five-hectare prime commercial property at the corner of Macapagal Avenue and EDSA Extension at the Bay Area, Pasay City, Metro Manila. The project is LEED Gold certified, walking distance to the LRT/MRT station and houses prominent tenants including the head office of the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) as well as the head office of the Philippine Economic Zone Authority (PEZA).
DoubleDragon currently has 803,000 square meters in its portfolio and plans to list via REIT about 200,000 to 250,000 square meters annually from 2020 to 2025, which will enable the company to unlock the values of its prime leasable assets and significantly strengthen its equity base year on year moving forward.
As of March 31, 2020, DoubleDragon’s Consolidated Total Assets stood at P115.32 Billion while Total Equity is at P44.50 billion. Cash position stands at P5.30 billion.
The REIT listing will enable the total equity of DoubleDragon to surpass the P50 billion mark.
According to DoubleDragon chairman Edgar “Injap” Sia II, other than the safeguards already indicated in the REIT listing rules, REIT investors generally want five elements present:
1. asset basket in a prime location that is seen to remain relevant in the next 30-50 years at least
2. reasonable yield above a bond coupon
3. good tenant mix
4. capable property management
5. good pipeline of assets for future infusion
“We believe all of these elements are present in DoubleDragon’s leasable portfolio,” said Sia.
“The REIT valuation of US$1 billion, we believe, is an attractive size that would appeal to a strong pool of both foreign and local REIT investors,” said DoubleDragon Chief Investment Officer Hannah Yulo-Luccini.
“REITs are a good way to recycle capital for expansion of the Company’s portfolio and raise equity to further boost its balance sheet. Since the offer will only cover 33.33% of the REIT basket, DoubleDragon will retain majority of the REIT assets so it will remain consolidated in the Company’s balance sheet,” added Yulo-Luccini./PN
