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Stock Commentary

DoubleDragon reinvestment report shows prioritization of CentralHub ahead of REIT IPO

Merkado Barkada
DoubleDragon reinvestment report shows prioritization of CentralHub ahead of REIT IPO
They’ll work quickly to fluff up CentralHub’s portfolio, to maximize the valuation that can be earned from selling shares, and if I were a betting man (and I am), I’d say that we’re going to see a huge chunk of the ?6.1 billion that DD has left from the DDMPR IPO distributed to the “simultaneous” CentraHub projects.
Merkado Barkada

These periodic reports are meant to track how companies spend the proceeds of REIT IPOs, as the REIT Law requires that all of the proceeds are spent on real estate development projects, within the Philippines, within one year from the REIT’s IPO.

In this case, DDMP [DDMPR 1.81 1.1%] had its IPO on March 24 of 2021; out of the roughly P9 billion that DoubleDragon [DD 7.14 0.6%] received from the DDMPR IPO after listing expenses and price stabilization activities, it still had about P6.1 billion left to distribute on December 31, 2021.

That means it took DD about 282 days to spend P2.9 billion on real estate-related things, but that it only has 82 days left to spend P6.1 billion. DD has to ramp up its rate of spending from the P10 million per day that it had been doing, to somewhere around P74 million per day over the next 82 days before the 1-year anniversary of DDMPR’s listing.

This last report showed that DD pushed about P632 million in December to CentralHub Industrial Centers (CentralHub), the industrial warehouse and logistics joint venture that DD has with Jollibee [JFC 230.00 2.2%], and earlier reports showed that it had already pushed P967 million to CentralHub in June of 2021.

So far, DD has distributed about 17% of the total IPO proceeds toward CentralHub, but this amounts to over 55% of the actual distributions that have been made to date.

DD and JFC just recently completed a 6.2-hectare industrial warehouse complex for CentralHub in Tarlac, and DD’s owner, Injap Sia, said that they are “currently ramping up the simultaneous construction of various CentralHub industrial complexes across the country as the demand for modern industrial warehouses continues to grow”.

MB BOTTOM-LINE

Taken altogether, Injap’s statements about ramping up “simultaneous construction of various CentralHub industrial complexes”, DD’s need to quickly disburse P6.1 billion over the next three months, and DD/JFC’s plan to IPO the CentralHub REIT later this year mean that we’re probably going to see a lot of funding pushed to CentralHub and a lot of activity in that “sunrise” industry from DD.

They’ll work quickly to fluff up CentralHub’s portfolio, to maximize the valuation that can be earned from selling shares, and if I were a betting man (and I am), I’d say that we’re going to see a huge chunk of the P6.1 billion that DD has left from the DDMPR IPO distributed to the “simultaneous” CentraHub projects.

That’s not a hot take or anything, but just trying to connect some of the potential dots to see what could be coming. Warehousing, cold storage, and logistics are all insanely hot, even more so if DD/JFC deliver a CentralHub IPO during any kind of post-Omicron retail/quick service restaurant recovery.

DDMPR shareholders are like “what about us?”, and DD (through this reinvestment report) seems to be saying “yeah, what about you?”

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Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.
Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

DOUBLE DRAGON PROPERTIES CORP.

JOLLIBEE FOODS CORP

PHILIPPINE STOCK EXCHANGE

REIT

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