DoubleDragon's REIT gets greenlight from regulators

MANILA, Philippines — DoubleDragon Properties Corp. just got the go-signal from regulators for an initial public offering of its upcoming real estate investment trust (REIT) company.

In a statement on Wednesday, the Securities and Exchange Commission (SEC) approved the maiden listing of over 17.8 billion common shares worth “nearly P14.7 billion” of DDMP REIT Inc.

Investors welcomed the news. As of 12:50 p.m. on Wednesday, shares in DoubleDragon were trading up 3.17% to P14.96 each, bucking a bearish mood in the main index.

With the SEC’s decision, DDMP REIT is set to hold their share sale from March 5 to 11 and debut at the stock exchange on March 19. Already, analysts are seeing another blockbuster IPO for businessman Edgar “Injap” Sia who last year bucked pandemic uncertainties by listing grocer MerryMart Consumer Corp. 

“With the increasingly unpredictable market right now, a lot of investors are turning to less risky assets. DD’s REIT provides an attractive dividend yield relative to the bourse average and any share price fluctuations after the listing would ideally be less volatile,” Anna Corenne Agravio, property stocks analyst at Regina Capital, said in a text message.

April Lynn Tan, head of research at COL Financial, agreed with Agravio. “Demand should be good given the low interest rate environment and the strong performance of other IPOs of companies owned by Injap Sia,” she said.

Of the total stocks to be listed, SEC said DDMP REIT would offer 5.9 billion common shares owned by DoubleDragon and shareholders Benedicto Yujuico and Teresita Yujuico. DDMP may sell 594.2 million shares on top of the offer if there would be higher investor demand.

DDMP is looking to sell shares at a maximum of P2.25 each. Assuming the full exercise of overallotment option, new investors will corner 36.67% of the issued and outstanding common shares of DDMP REIT, while DoubleDragon and the Yujuicos will own 44.33% and 19%, respectively.

The level of new investments will then be in compliance with REIT rules that required at least 33% of the firm to be publicly owned. REIT, enacted in 2009, has only been implemented recently due to high public float required by the previous Aquino administration and tax rules that did not bode well with family-owned conglomerates dominating the local corporate landscape.

Under the Duterte administration, the government lowered the public float requirement so REIT could push through, believing that the investment mechanism will broaden market participation and recycle more capital to fund property projects. This is because REIT firms are mandated to use proceeds from share sale to manage and purchase more properties.

In turn, 90% of the income of these ventures are required to be declared as dividends with shareholders. As for DDMP REIT, investors would be earning from operations of six office towers within DD Meridian Park in Pasay City that caters to tenants like business process outsourcing companies, government agencies and corporate locators.

Once listed, the DoubleDragon-backed REIT firm would only be following Ayala Land Inc.’s AREIT Inc. that debuted last year. Gotianun-led Filinvest Land Inc. also announced last month plans to establish its own REIT firm, although details of these had not been released.