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Stock Commentary

DDMP's new normal

Merkado Barkada
DDMP's new normal

DDMP [DDMPR 1.77], the Injap Sia-led REIT, a subsidiary of DoubleDragon [DD 10.24 1.39%]declared a P0.0277780/share cash dividend for shareholders of record on August 31, to be paid on September 13, 2021. Using DDMPR’s current share price, the annualized Q2 dividend gives DDMPR an estimated yield of 6.28%.

Based on the P2.25/share IPO price, DDMPR’s estimated yield is 4.94%. The Q2 dividend is 38% higher than the Q1 dividend, which itself was 1.7% lower than the Q4/20 dividend. Mr. Sia is quoted as saying, “DDMP REIT has already started to avail of the benefits of the tax incentives provided by the REIT Law of the Philippines which led to a 37.95-percent increase in dividends paid quarter on quarter”. DDMPR said that its Q2 net income was up 359% y/y to P1.84 Billion, and this DD press release says that DDMPR’s total occupancy reached 97.7% in Q2.


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The quarterly report hasn’t been released yet, so we don’t have a really good idea about the drivers for this massive change in fortunes. Q1’s press release said that DDMPR’s properties were 97.2% leased, so I doubt an additional 0.5% would result in a 37% higher dividend. I could be wrong, though, but for my understanding of how REITs work, and how to evaluate DDMPR’s potential growth next to what its peers AREIT [AREIT 36.65 0.81%] and Filinvest REIT [FILRT 7.40 3.35%] do, I will be taking a detailed look at what DDMPR did to get that result. Whether the pump in income came from the metaphorical boot being lifted off the neck of DDMPR’s portfolio, or whether it came from something constructive that DDMPR itself did to increase rents, that kind of information will be very important to determine if the new income level is something that we can consider to be “the new normal” for DDMPR.

If this is a new normal kind of situation, then what makes it interesting is that DDMPR’s price/yield combination has fallen out of step with AREIT’s. If we further take AREIT to be the standard to measure against, then we would expect DDMPR’s stock price to increase to bring its new estimated yield down from above 6% to be closer to AREIT’s near-5% estimated yield.

If AREIT isn’t the standard, then maybe we’d expect AREIT’s stock price to come down a bit (and the yield to increase) to get more in line with its peers. It will be interesting to see if DDMPR and FILRT float up in price to resemble AREIT’s yield and price-to-AFFO, or if AREIT floats down to resemble DDMPR and FILRT. My feeling is the former, but we will have to see. I’m new to analyzing the REIT sector at this level, so I’m just taking it all in and trying to make sense of it all just like everybody else!

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DOUBLE DRAGON PROPERTIES CORP.

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