DoubleDragon to breach P1B profit by 2016
Screengrab from www.doubledragon.com.ph
MANILA, Philippines — The newly listed DoubleDragon Properties Corp. expects to breach the P1-billion net profit mark by 2016 with the rollout of a chain of community-based malls under the “CityMall” brand.
By 2020, during which DoubleDragon would have reached its target of setting up about 100 community malls, net profit could hit P4.8 billion, DoubleDragon’s Edgar Sia II said in an email.
In line with its expansion plan, DoubleDragon recently inked a partnership deal with a local group to put up two CityMall community malls in Zamboanga City. Its shopping mall unit, CityMall Commercial Centers Inc. (CMCCI), ha executed an investment and shareholders agreement with Galleria Zamboanga Inc. (GZI) to form a company that would develop a shopping mall in Tetuan and another in the Guiwan section of Zamboanga.
Under the deal, GZI will contribute a one-hectare lot in Tetuan and a 1.4-hectare lot in Guiwan to acquire a 30-percent interest in the joint venture company, called Prime DDG Commercial Centers Inc. CMCCI will own 70 percent of Prime DDG.
GZI is owned and controlled by the Zamboanga-based Lim family which currently operates Southway Square Mall. It also owns Shop-O-Rama Department Store, which has been in operation in downtown Zamboanga for over three decades.
The Guiwan property is located right beside the public market and is the only available corner lot with an area of over one hectare. The Tetuan lot is right in the middle of a highly populated residential area.
Construction is expected to start by the second quarter of this year, the disclosure said.
DoubleDragon, a joint venture between Mang Inasal founder Edgar “Injap” Sia II and Jollibee group founder Tony Tan Caktiong, expects to invest close to P24 billion to build a chain of 100 community malls in the next five to six years. This rollout is expected to bring to 700,000 square meters the leasable space inventory of CMCCI.
The shopping mall business under CMCCI is expected to become the company’s flagship business and a key component to meet its goal of becoming one of the country’s largest property developers by 2020. Shortly before DoubleDragon’s stock debut, tycoon Henry Sy-led SM Investments Corp. acquired a 34 percent stake in CMCCI but DoubleDragon kept a 66 percent interest as well as management control.
For each mall to be built under the CityMall network, about P270 million in investment is needed for those what will be built on land owned by the company, Sia said. For those to be built on leased properties or through a joint venture with landowners, investment cost is about P200 million per mall.
Once fully operational, each CityMall is expected to yield 12-14 percent per year, giving the company a good spread over the annual funding cost of 4-5 percent, allowing cost recovery in 10 years.
DoubleDragon chair Edgar Sia II earlier explained that the projected yields exclude the property value appreciation and the additional potential business opportunity of using the portion of the properties where CityMall will rise for either mid-rise office or residential development after five to seven years.
The CityMall chain is envisioned to become one of the largest independent community mall chain in the country with a footprint of about 5,000 to 10,000 square meters each. Each community mall will be located in prime locations all over the country, mostly in the Visayas and Mindanao.
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