Real estate developer DoubleDragon Properties Corp. is offering up to Php9.7 billion worth of 7-year fixed-rate retail bonds that pay an annual coupon rate of 6.0952 percent.
Proceeds from the offer will be used to finance DoubleDragon’s core real estate projects for 2017 and 2018. Among these projects include the construction of 10-13 CityMalls, its chain of community shopping centers, as well as the acquisition of 15-20 sites for future CityMall developments. The company will also use the funds for the construction of DD Meridian Park near the SM Mall of Asia and Jollibee Tower at the Ortigas central business district.
The retail bonds’ coupon rate is higher than that of the latest-issued 7-year Treasury bond, which stood at 4.5 percent according to data from the Bangko Sentral ng Pilipinas. It is also much higher than interest rates of time deposits lasting over two years, which average at 2.9 percent.
However, investments in corporate retail bonds are riskier compared to bank deposits, which are insured by the government. Interested investors are encouraged to seek professional financial advice before purchasing retail bonds.
DoubleDragon is headed by Edgar “Injap” Sia II, the founder of fast-food chain Mang Inasal and the youngest Filipino dollar billionaire according to US-based publication Forbes. As of end-May, the company has opened 15 CityMalls and has acquired 41 more sites for future mall developments. It is aiming to have a network of 30 operational CityMalls by the end of the year and to expand its leasable portfolio to one million square meters by 2020.
The company’s revenues hit Php1.3 billion as of end-2016, a 66.9-percent increase from the year before. DoubleDragon was also recognized last February for its stock price rising by 2,500 percent from its listing in April 2014. According to US-based media firm Bloomberg, its rapid ascent bested 460 other Asian property companies valued at least $500 million.
Related story: Injap Sia’s DoubleDragon is Asia’s Hottest Property Stock
However, the stock fell 21.5 percent as of end-June 2017 from a year ago, one of the worst performing among listed companies owned by Philippine billionaires in the Forbes list.
Related story: How Are PH Billionaires Faring Under Duterte?
Interested investors can purchase the retail bonds for a minimum of Php50,000. Additional placements can be made in increments of Php10,000. The offer period began on July 7 and will last until July 13. The retail bonds will be issued on July 21.
This bond offering serves as the second tranche of DoubleDragon’s Php15-billion bond shelf registration. The company issued the first tranche last December, where the company sold Php5.3-billion worth of 10-year retail bonds. The first tranche of 10-year bonds paid a coupon rate of only 5.97 percent p.a. Just like the first tranche, this offering received a credit rating of PRS Aa from the Philippine Rating Services Corp., which means the company has a “strong capacity to meet its financial commitments.” Those interested are advised to read the offer supplement for more details.
BDO Capital & Investment Corp., RCBC Capital Corp. and Maybank ATR Kim Eng serve as the offer’s joint issue managers. They also serve as its joint lead underwriters and joint bookrunners together with BPI Capital Corp.
Lorenzo Kyle Subido is a staff writer of Entrepreneur PH