DoubleDragon to tap offshore bond market

Ahead of its real estate investment trust (REIT) public offering plan, property developer DoubleDragon Properties Corp. is making its debut in the offshore bond market with an offering of five-year debt paper, which is aimed at raising $75 million.

This is seen to boost DoubleDragon’s visibility to global investors while locking in long-term funds at record-low interest rates brought about by the aggressive monetary easing by major central banks across the globe to counter economic fallout from the coronavirus pandemic.

The senior guaranteed bonds due 2025 are priced to yield 7.25 percent a year, DoubleDragon disclosed to the Philippine Stock Exchange on Wednesday.

“Currently, the offshore bond market presents itself as a good source of long-term funding. In addition to diversification, it is a good opportunity to introduce DoubleDragon in the offshore bond market as the bonds will be listed on the Singapore Exchange,” DoubleDragon chair Edgar Sia II said in a text message on Wednesday.

DoubleDragon will tap the overseas bond market through wholly owned subsidiary, DDPC Worldwide Pte. Ltd., which executed a subscription agreement with Credit Suisse Ltd. (Singapore) as sole global coordinator, joint lead manager and joint bookrunner, and PNB Capital and Investment Corp. as joint lead manager and joint bookrunner. The bonds are guaranteed by the parent company.

“The proceeds of the bonds will be used for capital expenditures in property investments, refinancing of short-term indebtedness and for general corporate purposes,” the disclosure said.

Proceeds from the offering are seen to significantly increase the company’s cash position alongside its planned P16.97-billion REIT offering.

DoubleDragon earlier announced plans to infuse its single most valuable property portfolio—DD Meridian Park in Pasay City where the company’s headquarter office is—into a REIT with a basket of assets estimated at around P50.89 billion, one third of which will be sold to the public.

This initial public offering (IPO) intends to raise as much as P16.97 billion that in turn can be used by the group to fund other local real estate projects within a year. Although it is not the curtain-raiser for REIT as a new asset class in the Philippines as Ayala Land-sponsored AREIT Inc. is coming to market first, the proposed offering is bigger than AREIT’s maximum IPO size of P15.1 billion.

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 required 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.