Long-time partners DoubleDragon Properties Corp. and Jollibee Foods Corp. have finalized a P3.97-billion property and cash infusion deal that will support the former’s industrial leasing arm, CentralHub Industrial Centers Inc., ahead of a proposed real estate investment trust (REIT) initial public offering next year.
Under the deal, Jollibee will acquire common shares of CentralHub in exchange for 16.4 hectares of industrial properties it is currently utilizing as commissaries. Aside from the asset infusion, Jollibee’s board has also approved cash subscription of 1.56 billion common shares in CentralHub.
The portfolio of industrial properties that will be infused into CentralHub includes the largest operating commissary of Jollibee.
The deal expands the total industrial land portfolio of CentralHub to 39.8 hectares.
Income contributor
“We are excited to work together with Jollibee in developing CentralHub into the largest landlord of industrial warehouses in the country. We see CentralHub to become a major recurring income contributor to DoubleDragon,” said DoubleDragon chair Edgar Sia II.
“Not only will this partnership between DoubleDragon and Jollibee bring forth many benefits to both sides, but it will also accelerate CentralHub’s goal to become the first and the largest industrial real estate investment trust in the Philippine Stock Exchange,” added Sia.
“DoubleDragon will further grow its revenue and profit sources and continue to strengthen its balance sheet year on year with strategic steps such as this partnership with Jollibee,” said DoubleDragon chief investment officer Hannah Yulo-Luccini
Established in 2017, CentralHub has a portfolio of industrial warehouse complexes suited for warehouse, commissary, cold storage facility and logistics distribution center use. These are leased to locators operating nationwide.
Recycle capital
By using the REIT structure, CentralHub will be able to recycle capital to put up more industrial warehousing facilities across the country.
As an asset class, REIT gives investors the option to invest directly in the finished projects that are already earning money—such as office units, hotels, shopping malls, industrial properties, residences for rent, infrastructure ventures like toll roads and power plants—and not just in the property developer itself.
Alternative investment
The Philippine REIT Law of 2009 requires the distribution of at least 90 percent of income annually, thus giving investors an alternative and attractive form of investment.
In a separate disclosure, Jollibee said the timing for the registration of the REIT initial public offering and the filing of the application for the REIT listing of CentralHub would still be subjected to discussions with DoubleDragon plus the necessary approvals from regulators.