DoubleDragon REIT kicks off 2021 IPO season

Real estate investment trust DDMP REIT Inc. of property developer DoubleDragon Properties Corp. will be the first company to debut on the local stock market this year with an initial public offering (IPO) worth as much as P14.7 billion all set this March.

The Philippine Stock Exchange (PSE) last week cleared the offering, which will also mark the second REIT listing in the country after Ayala Land-sponsored AREIT Inc. Based on the maximum price of P2.25 a share, DDMP REIT’s offering could be bigger than AREIT’s P13.6-billion IPO last year.

The IPO will run from March 10 to 16 after the final pricing on March 5. DDMP REIT is tentatively scheduled to be listed on the main board of the PSE on March 23.

The base offer consists of 5.94 billion common shares with an overallotment option of up to 594.25 million common shares. This will bring about 36.7 percent of DDMP REIT’s shares to public hands, assuming exercise of the overallotment option.

“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 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, a very important inclusion for both domestic and foreign investors,” DoubleDragon chair Edgar Sia II said.

Sia’s group also raised the IPO curtain last year with the debut of retail arm MerryMart Corp. in June 2020, despite tough lockdown measures amid the coronavirus pandemic. 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.

Optimistic

“We are optimistic that more property companies will list REITs on the exchange this year given the benefits to the REIT company, its investors and to the country’s economy because of the reinvestment in the Philippines rule for the REIT’s sponsor,” said PSE president and chief executive officer Ramon Monzon.

As required with all IPOs, 10 percent of the offer shares will be set aside for local small investors.

These shares are available for subscription to local small investors through the PSE Electronic Allocation System (PSE EASy) platform during DDMPR’s offer period.

All first time REIT IPO investors—whether subscribing through PSE EASy or directly through REIT-eligible stockbrokers—must secure a Name on Central Depository (NoCD) account before they can get REIT shares.

Credit Suisse, DBS, Nomura and PNB Capital have been mandated to act as joint global coordinators and joint bookrunners for the IPO, together with RCBC Capital, ICCP, Macquarie, Maybank Kim Eng and CIMB.

All of the proceeds from the REIT IPO will be reinvested in the Philippines, as required by relevant regulations. Majority of the proceeds will be infused as equity into CentralHub Industrial Centers Inc. to increase its leasable industrial warehouse space and footprint nationwide. The warehouse complexes are designed for use as warehouses, cold storage facilities, commissaries, or as logistics and distribution centers.

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. INQ