DoubleDragon sets REIT right IPO price, size

Philippine Daily Inquirer / 05:18 AM March 06, 2021

Property developer DoubleDragon Properties Corp. has priced the initial public offering (IPO) of its real estate investment trust (REIT) right at the maximum of P2.25 per share, finalizing the size at P14.7 billion, or the largest REIT offering in the country so far.

At P2.25 a share, the projected dividend yield as stated in the REIT plan is 5.07 percent for 2021 and 5.45 percent for 2022.

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Gerry Valenciano, president of PNB Capital, one of the underwriters, said the offering had been oversubscribed by 1.78 times the base offer. This robust demand allowed DDMP (DoubleDragon Meridian Park) REIT to price the maiden offering at the top end of the range. “Throughout the book-building period, we received overwhelming demand and interest from high-quality local institutional investors,” he said.

DoubleDragon chair Edgar Sia II said the overallotment option had been fully exercised. The base offer consists of 5.94 billion common shares with an overallotment option of up to 594.25 million common shares. With the exercise of the overallotment, about 36.7 percent of DDMP REIT’s shares will be brought to public hands.

REIT is a corporation that primarily invests in income-generating real estate assets. It gives investors an opportunity to invest directly in the finished projects rather than the developer itself. This was meant to attract dividend-seeking investors because the REIT law required the distribution of at least 90 percent of income as dividends yearly.

“DDMP REIT is an attractive investment option. It’s a great way to get dividend income at the same time have potential capital appreciation. It’s also a great way to get real estate exposure without putting much capital and without having your capital tied up. Since it’s listed, it can be sold anytime,” said Jaycob Yedra, stock broker at AP Securities Inc.

“Yield is attractive given the prevailing low interest rate environment. It’s a good hedge against inflation,” said Manny Cruz, chief strategist at Papa Securities. The DDMP basket includes a premier corner lot along the main thoroughfares of Macapagal Avenue, Edsa Extension and Roxas Boulevard, where the first six completed buildings sit on. “This feature is expected to be a game changer since the value of the prime double corner 4.75-hectare block of land with titled land ownership to be held in perpetuity should keep on appreciating decade after decade,”Sia said.

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