Newest REIT player’s solid portfolio makes for a great investment
It’s one attractive investment option that holds much promise.
DoubleDragon Properties is tapping the real estate investment trust market through DDMP REIT Inc., which is set to offer 5.94 billion common shares to the stock market while another 594.25 million common shares may be offered as overallotment. This provides investors a new asset class that could potentially have higher dividend yields compared to other traditional financial products.
DDMP REIT’s initial public offering, which was recently approved by Securities and Exchange Commission (SEC), is expected to raise some P14.7 billion, the bulk of which will be used to build CentralHub warehouse complexes. It mandated Credit Suisse, DBS, Nomura & PNB Capital to act as joint global coordinators and joint book runners together with RCBC Capital, ICCP, Macquarie, Maybank Kim Eng and CIMB for the REIT IPO.
No doubt that DDMP REIT comes in at an opportune time, well poised to capture the growing interest of investors in this new asset class. A good number of reasons why this is so comes to mind.
For one, the REIT itself presents an attractive investment option.
Inquirer columnist April Lee-Tan said in February last year that “for retail investors like us, buying REITs is attractive because it allows us to enjoy passive income outside of traditional financial products… Investors also enjoy the benefits of owning income-generating assets even without having a lot of capital. These include rental escalation or tariff hikes, higher occupancy rates or growing demand, capital appreciation, leverage and diversification. Finally, because REITs are listed, they are liquid and can be sold easily. This is not possible when investing in physical properties or private companies.”
She however advised investors to look beyond yields and also consider the quality of assets that are part of the REIT as well as its growth plans. In this case, DDMP REIT scores high.
Premium property portfolio
Apart from the fact that DDMP REIT is being led by Edgar “Injap” Sia II, a young, business-savvy visionary, the company’s real estate assets comprise a premium property portfolio that boasts of a highly strategic location, a substantial potential for expansion, and a solid track record.
DDMP REIT will include the first six completed buildings in DD Meridian Park—four of which are LEED Gold Certified while the other two towers, DoubleDragon East & West, are pre-certified LEED Silver with above standard specifications. These newly built towers—which have Grade A specifications and large, efficient leasable floor plates—embrace sustainability well. The buildings are installed with LED lights, double glazed glass and solar panels, which supply a portion of the towers’ electricity requirements.
Its strategic, premium location in the Bay Area further places its tenants conveniently near other central business districts, major thoroughfares like NAIA Expressway, the airport, planned infrastructure projects, transport nodes and hubs, as well as large shopping complexes. The massive potential for growth in this area alone has long been recognized by companies given the many advantages of locating here—foremost of which is its accessibility.
Within DD Meridian Park, one can also readily find services, retail and dining establishments for the comfort and convenience of tenants and their visitors.
Compelling REIT offering
Further to that, DDMP REIT will likewise own the freehold land and the buildings. This means that investors have more upside exposure from potential capital appreciation of the land. This is seen to provide additional stability to the asset’s valuation compared to REITs that only own or lease buildings.
“The DDMP basket is seen to be a compelling REIT offering since it will include the land, a premier corner lot located 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 gamechanger 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, a very important inclusion for both domestic and foreign investors,” Sia, who sits as chairman of DoubleDragon Properties, said in a disclosure in November last year.
“When there is underlying titled land ownership included in the REIT shares, even a hundred years from now it should keep its hard value intact. We see DDMP shares as a ‘Pamana Stock’ that even our future grandchildren will be happy to inherit,’ he added.
DDMP REIT will no doubt be a gamechanger in this arena as it continues to reimagine possibilities while creating an environment that is highly conducive for investment.
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