FREE Special Report: What’s a Good Price to Buy Double Dragon (DDMP) REIT?

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SUMMARY OF RECOMMENDATION

DoubleDragon Properties Corp. (DD) will be doing its REIT offering through DDMP REIT, Inc., a real estate company established to operate as a real estate investment trust. This will be the second REIT in the Philippines after Ayala Land REIT was listed last August 2020.

DDMP REIT holds office assets in its property portfolio, situated in the fast-growing Bay Area, having a Grade A status, high occupancy rates and annual rental escalations.

The appraised net asset value (NAV) of DDMP REIT is …, translating to a Net Asset Value (NAV) per share of … This means the indicative offer price of P2.25 per share reflects …

 

OUR PARTNER BROKER’S ANALYSIS

What is a A REIT?

A real estate investment trust (REIT) is a stock corporation created for the purpose of owning and managing income-generating real estate such as office buildings and shopping centers, among others. REITs make money from their income-generating assets, most commonly through recurring rental income. In the case of an “office REIT” like the DDMP REIT, revenues will come from the rental income through its office buildings located in the Bay Area.

Investors can earn by investing in REITs through: (1) regular dividends and (2) price or capital appreciation. REITs are required by law to distribute at least 90% of their distributable income as dividends. Since REITs trade like an ordinary stock, investors can also earn through price appreciation.

 

About DDMP REIT

DoubleDragon Properties Corp. (DD) will be doing its REIT offering through DDMP REIT, Inc., a real estate company established to operate as a real estate investment trust. This will be the second REIT in the Philippines after Ayala Land REIT was listed last August 2020.

DDMP REIT will be 44% owned by DD, 19% by Spouses Yujuico (Benedicto and Teresita Yujuico) and 37% by the public after the initial public offering (assuming the full exercise of over-allotment option).

DDMP REIT gave an indicative offer price of P2.25 per share.

DDMP REIT will initially have three (3) commercial properties having a total of six (6) office buildings in its portfolio, namely DoubleDragon Plaza, DoubleDragon Center East and DoubleDragon Center West, with a total of around 172k sq.m. of gross leasable area (GLA) as of 2Q 2020, all located in the Bay Area in Pasay City.

 

Portfolio of properties

DDMP REIT will initially have three (3) commercial properties having a total of six (6) office buildings in its portfolio, namely DoubleDragon Plaza, DoubleDragon Center East and DoubleDragon Center West, with a total of around 172k sq.m. of gross leasable area (GLA) as of 2Q 2020. These properties are located in the Bay Area in Pasay City, which is expected to be the fastest growing CBD location in Metro Manila until 2023, according to Colliers.

All properties are rated as “Grade A,” which means the buildings have above average rental and capital value. Despite the three properties having Grade A status, applications for PEZA-accreditation are still pending for all buildings, which we think is a disadvantage and may not look as attractive to prospective BPO clients should some office space be vacated. The appraised value of the properties is P35.4B (Asian Appraisal).

 

DoubleDragon Plaza – This property consists of four (4) 11-storey towers with a retail area on the ground floor. DoubleDragon Plaza has approximately 139,240 sq. m. of gross leasable area, designated for office leases. DoubleDragon Plaza commenced commercial operations in 2017 and was completed in 2018.

 

DoubleDragon Center East – This property is an 11-storey tower with a retail area on the ground floor. DoubleDragon Center East has approximately 16,197 sq. m. of leasable space. DoubleDragon Center East was completed and commenced commercial operations in 2019.

 

DoubleDragon Center West – This property is an 11-storey tower with a retail area on the ground floor. DoubleDragon Center West has approximately 16,815 sq. m. of leasable space. DoubleDragon Center West was completed and commenced commercial operations in 2019.

 

Valuation

The appraised net asset value (NAV) of DDMP REIT is …, translating to a NAV per share of … This means the indicative offer price of P2.25 per share reflects …

Note that POGOs and gaming-related BPOs lease 65% of the total GLA of DDMP REIT’s properties. The market may put a discount to DDMP REIT’s NAV due to the “POGO risk” considering the negative impact of the pandemic to the sector, travel ban, as well as the tax issues the POGO industry is facing.

We think a “comfortable” price to buy DDMP REIT is …

 

Check out these other previous AREIT Special Reports!

Special Report: Ayala REIT (AREIT) a Discount vs. its IPO Price?

Special Report: Is AREIT Inc. Overvalued?

Special Report: Buy the Ayala REIT (AREIT) offering?

 

 

This report is prepared by PinoyInvestor’s partner broker below. Sign up to this stock broker to avail of their complete trading brokerage services:

Unicapital Securities
Unicapital Securities

Unicapital Securities is one of PinoyInvestor’s partners in delivering superior and reliable stock research reports that help Filipino investors make smart stock investing decisions! Learn more about them here.