DoubleDragon Properties Corp. has prepared its REIT application with the Securities and Exchange Commission and the Philippine Stock Exchange, according to Philstar. This comes at the heels of better stock market sentiment and the economy’s gradual recovery from the pandemic.
Named DDMP REIT Inc., the company’s REIT listing is worth P14.7 billion. It features the Double Dragon Meridian Park, a prime 4.75-hectare corner lot situated along Macapagal Avenue, EDSA Extension and Roxas Boulevard, where six buildings currently stand.
According to the company’s website, one of the establishments there is the 11-story office complex DoubleDragon Plaza that has over 130,000 square meters of leasable space. With four towers, the offices will have a retail podium on each of the ground floors.
Two more buildings are in the commercial park, DoubleDragon Center EAST and DoubleDragon Center WEST. They feature 10 floors above the surface and one level basement parking.
Strong Real Estate Asset
DoubleDragon will use the proceeds from the offering to build 425,000 square meters of building floor area and boost its revenues further. As the REIT law requires, the proceeds from REIT listings should be reinvested in the country.
The company officials are optimistic that the offering will increase in value decade after decade since the asset is titled land ownership to be held in perpetuity. Calling the REIT product a ‘pamana stock,’ the property developer said that even future generations can inherit it.
DoubleDragon plans to REIT its leasable portfolio in tranches as they mature, expanding the company’s equity size. They expect to hit their goal of P120 billion total equity by 2030.
Giants in the REIT Market
DDMP REIT is the country’s second REIT listing after Ayala Land’s AREIT debuted in August. The latter offers up to 47.86 million new common shares and up to 409.02 million existing common shares. It includes three properties in Makati, namely Solaris One, Ayala North Exchange, and McKinley Exchange. Its gross leasable area is 152,755.80 square meters with an occupancy rate of 99.9 percent.
According to Manila Bulletin, AREIT achieved a net profit of P844 million in the first nine months of the year amid the pandemic. The company credited this impressive financial to the stable operations of its leasing portfolio.
Specifically, the acquisition of McKinley Exchange in February 2020 and the higher occupancy rate at Ayala North Exchange increased Ayala Land’s rental income to P1.1 billion, an increase of nine percent from the same period last year.
Meanwhile, Robinsons Land Corporation (RLC) plans to list its own REIT next year. In Lamudi’s recent webinar in partnership with RLC, titled Investing in a Bear Market, Rommel Rodrigo, Head of RLC’s Investors Relations, mentioned this company direction while reporting about the firm’s stable office business unit. The offering will likely range from $1.5 to 2 million, according to Rodrigo.
In a Business Mirror report, RLC plans to list 25 office buildings in its REIT with a net leasable area of over 600,000 square meters.
Recovery from the Pandemic
In many ways, experts see that the REIT offerings can positively impact the economy amid the financial challenges the current health crisis brought. For one, it can facilitate activities in the equities market, according to accounting firm SGV and Co., as cited by Business Mirror.
The agency projects that other real estate companies may be convinced to convert their current portfolios into REITs, following the initial offerings.
Back in August, top real estate services firm JLL said that REITs can serve as a “cheap funding source for developers,” providing fresh capital in constructing future projects, as mentioned in Philstar.
The industry expert identified the office segment as an attractive asset class amid the pandemic since it promises resilient rental growth rates. Historically, it likewise performed well given the interest coming from outsourcing agencies and online gaming operators.
Additionally, foreign investors’ need for space makes the office segment a promising inclusion in REITs. Those looking to secure business continuity will likely set up headquarters in key areas to strengthen backend operations.
JLL added that areas outside the capital region will see more demand for offices. This includes Cebu and Davao. Provincial cities will likely see more economic activities in the new normal.
Sources: Philstar, DoubleDragon, Manila Bulletin, Business Mirror