• Dou­bleDragon plans to list 4 sub­sidiaries un­der REIT

The Philippine Star - - BUSINESS - By IRIS GON­ZA­LES

Dou­ble Dragon Prop­er­ties Corp., the listed prop­erty gi­ant, plans to list all its four ma­jor sub­sidiaries un­der the REIT land­scape.

REIT or Real Es­tate In­vest­ment Trust is a spe­cial­ized com­pany that earns in­come through its real es­tate prop­er­ties. The in­come trick­les down to share­hold­ers in the form of div­i­dends.

The Philip­pine Stock Ex­change and the Se­cu­ri­ties and Ex­change Com­mis­sion (SEC) are now lay­ing the ground­work for new and more in­vestor-friendly rules that would fi­nally pave the way for REIT list­ings in the stock mar­ket.

“We aim for prod­ucts like the REIT to be launched soon,” said PSE chairman Jose Pardo.

With this, Dou­bleDragon chairman Edgar “In­jap” Sia said the com­pany is con­sid­er­ing list­ing its four ma­jor sub­sidiaries as REIT.

“In Dou­bleDragon’s case, all our four ma­jor sub­sidiaries fo­cused on pro­vin­cial re­tail leas­ing, of­fice leas­ing, ho­tels and in­dus­trial ware­houses are good can­di­dates for REIT list­ing as they are all real es­tate as­sets that gen­er­ate re­cur­ring in­come,” Sia said in an in­ter­view.

He said Dou­bleDragon’s four sub­sidiaries could do REIT list­ing sep­a­rately be­cause in­vestors nor­mally have a spe­cific sub-in­dus­try within the prop­erty sec­tor that they pre­fer to in­vest in.

Dou­bleDragon’s sub­sidiaries are Ci­tyMalls Com­mer­cial Cen­ters Inc. for pro­vin­cial re­tail leas­ing; DD Merid­ian Park Devel­op­ment Corp for of­fice leas­ing; Hotel of Asia Inc. for ho­tels; and Cen­tral Hub for in­dus­trial leas­ing.

Sia said there are many ben­e­fits of a REIT list­ing.

“In our opin­ion, the ben­e­fit of REIT list­ing is first-to be able to re­cy­cle cap­i­tal to fur­ther grow the leasable port­fo­lio,” Sia said.

He said it is also a good way to un­lock the mar­ket value of the com­pany’s rev­enue gen­er­at­ing real es­tate as­sets.

“Gen­er­ally the REIT in­vestors would let’s say, ex­pect a six per­cent yield, and if your as­set bas­ket yields 18 per­cent, then the com­pany will be able to cre­ate value that is triple its ac­tual cost to build. That will trans­late to about P100,000 to P150,000 per square me­ter, and if the com­pany has ac­cu­mu­lated one mil­lion to­tal square me­ters of leasable space, then that should trans­late to over P100 bil­lion in as­set valu­a­tion, and should also en­able the com­pany to gen­er­ate new cap­i­tal to fur­ther grow its leasable spa­ces to rent out to its var­i­ous ten­ants,” Sia ex­plained.

The REIT Act was passed in 2009, but no com­pany finds the land­scape at­trac­tive enough to list in the mar­ket. Prop­erty play­ers cited fric­tion costs such as min­i­mum pub­lic own­er­ship re­quire­ments and taxes.

How­ever, the SEC has al­ready agreed to cut REITs’ min­i­mum pub­lic own­er­ship (MPO) to 33 per­cent and the Bureau of In­ter­nal Rev­enue (BIR) has clar­i­fied that ini­tial trans­fers of prop­erty to REITs are ex­empt from value added tax as pro­vided by Repub­lic Act No. 10963 or the Tax Re­form for Ac­cel­er­a­tion and In­clu­sion (TRAIN) Act.

Thus, cor­po­rate reg­u­la­tors will amend the ex­ist­ing IRR of the REIT Act of 2009.

“We are glad that it looks like the REIT plat­form is ex­pected to be ready this year, a good tim­ing for Dou­bleDragon as this year 2019 we ex­pect to al­ready have 800,000 square me­ters or 80 hectares of com­pleted leasable space port­fo­lio,” Sia said.

He said that once the re­vised REIT rules are out, Dou­bleDragon should be ready to con­sider REIT list­ing for its sub­sidiaries if it would re­sult in fur­ther strength­en­ing Dou­bleDragon’s over­all po­si­tion.

“In our per­spec­tive, an­other key fac­tor to in­crease the de­sir­abil­ity of the REIT bas­ket is if it is a dom­i­nant player in that spe­cific sub-in­dus­try, and we be­lieve by then our home­grown brands and rel­e­vant projects such as Ci­tyMall, DD Merid­ian Park, As­cott-DDMP, Jin­jiang Inn Phils, Dragon8 Mall Divi­so­ria, Cen­tralHub, and Hotel 101, would have deep mar­ket trac­tion al­ready,” he said.

Newspapers in English

Newspapers from Philippines

© PressReader. All rights reserved.