P17B IPO eyed for DoubleDragon’s DD Meridian Park REIT

DD Meridian Park, DoubleDragon’s most valuable property

Property developer DoubleDragon Properties Corp. is set to infuse its single most valuable property portfolio – DD Meridian Park in Pasay City – into a real estate investment trust (REIT) that aims to raise P16.97 billion from an initial public offering by October.

The intended DD Meridian Park REIT will consist of seven buildings at the corner of EDSA Extension and Diosdado Macapagal Boulevard with a total area of 248,349 square meters, DoubleDragon said in a disclosure to the Philippine Stock Exchange on Friday.

The estimated value of the basket of REIT assets stands at around P50.89 billion, one third of which will be sold down to the public to raise P16.97 billion that in turn can be used by DoubleDragon for new projects.

The REIT proceeds will be enough to construct about 450,000 square meters of building floor area to augment the group’s leasable portfolio and recurring rental revenues in the near term, the disclosure said.

The company is preparing to file its REIT listing application with the Securities and Exchange Commission and the Philippine Stock Exchange this August and aims to list DDMP REIT by October.

This is expected to become the second REIT listing in the country after Ayala Land’s AREIT Inc. At the maximum price, DoubleDragon’s proposed REIT IPO is bigger than AREIT’s P15.1 billion offering.

The REIT listing is seen to bring up DoubleDragon’s equity base past the P50-billion mark.

“Other than the safeguards already indicated in the REIT listing rules, REIT investors generally want five elements present; 1. Asset basket in a prime location that is seen to remain relevant in the next 30 to 50 years at least, 2. Reasonable yield above a bond coupon, 3. Good tenant mix, 4. Capable property management, and 5. Good pipeline of assets for future infusion. We believe all of these elements are present in DoubleDragon’s leasable portfolio,” said DoubleDragon chair Edgar Sia II.

REIT is a corporation that primarily invests in income-generating real estate such as office spaces, shopping malls, service apartments, and even hotels, hospitals and warehouses. 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 requires the distribution of at least 90 percent of income as dividends annually.

The REIT Act, passed by Congress in 2009, allows REIT companies to list and trade its shares of stock, allowing developers to recycle capital for further property development and expansion initiatives.

In addition to the seven buildings that will form the first tranche of DDMP REIT, DoubleDragon said two more buildings would be infused into the DDMP REIT in about two to three years. These two other buildings are still currently under construction, also located in the DD Meridian Park complex.

DD-Meridian Park Development Corp. is a joint venture partnership between DoubleDragon and the Yujuico family. The complex sits on a five-hectare prime commercial property at the Bay Area.

DDMP REIT’s proposed equity structure