DoubleDragon Properties Corp. is a newly listed real estate company led by its Chairman Edgar “Injap” Sia II (founder of Mang Inasal) and the Co-Chairman Tony Tan Caktiong (founder of Jollibee). Having achieved a market capitalization of over $2 Billion in less than two years from IPO, it is now one of the top 5 listed companies on the Philippine Stock Exchange in terms of market capitalization. The Company’s Vision is to accumulate 1 Million square meters of leasable space by 2020. 700,000 square meters of leasable space will be coming from the rollout of 100 community malls in the provincial areas of the Philippines under its subsidiary “CityMall” which is a partnership with SM Investments Corporation. CityMall is poised to become the largest independently branded community mall chain in the country. The balance of 300,000 square meters of leasable space will be coming from two office projects in Metro Manila, namely DD Meridian Park in the Bay Area and Jollibee Tower in Ortigas CBD. The Company's flagship project in Metro Manila is DD Meridian Park, a 4.8 hectare prime commercial block located in the growing central business district of the Bay Area along the corners of Roxas Blvd., EDSA and Macapagal Ave. The first phase, DoubleDragon Plaza, which consists of four BPO Towers on top of a retail podium is currently under construction and slated for completion by 2018. DD Meridian Park, once fully built, will contribute 280,000 square meters of leasable space to DoubleDragon’s portfolio.
L-R: Edgar J. Sia II–Chairman and CEO, Ferdinand J. Sia–President, Rizza Marie Joy J. Sia–Chief Finance Officer, Hannah Yulo –Chief Investment Officer
Message from the Executive Committee
Dear DD Shareholders,
2017 has been another milestone year for Your Company as we continue to deliver strong growth and value creation for our shareholders.
Seeing new opportunities, Your Company revised its 2020 vision upwards to developing to 1.2 Million square meters of leasable space from its original vision of only 1 Million square meters of leasable space.
The additional 200,000 square meters of leasable space will be coming from Your Company’s expansion in industrial warehouse leasing and hotel business.
The enhanced 2020 vision is expected to improve Your Company’s 2020 consolidated net income target to P5.5 Billion, supported by it’s four growth pillars - retail leasing, office leasing, industrial warehouse leasing and hotel business, which will provide Your Company with a diversified source of recurring revenues backed by a string of appreciating hard assets.
(1) Your Company’s consolidated net income rose 71.8% year-on-year, reporting Php2.5 Billion of consolidated net income for the year. More importantly, DoubleDragon’s recurring revenue rose 3.76x to Php1.3 Billion now making up 19.8% of consolidated revenues which likewise rose 78.1% to Php6.6 Billion from only Php3.7 Billion the previous year. Consolidated EBITDA of your Company more than doubled to Php4.8 Billion with compounded annual growth of 104.11% since 2015 while Consolidated Net Income figures also hit compounded annual growth of 101.36% since 2015.
(2) As of the end of 2017, Your Company has completed 332,500 square meters of leasable space and Your Company expects that over 50.0% of its target leasable portfolio will already be online and should start to contribute substantially by 2019. The first 25 CityMalls operational as of the end of 2017 were averaging 95% leased out. Your company expects a total of 50 completed malls by the end of 2018 to form a large part of this year’s targeted 600,000 square meters of completed leasable portfolio which we expect to start contributing on a full year basis next year. DoubleDragon Plaza which consists of over 130,000 square meters of leasable office space across four office towers was completed at the end of 2017, a quarter ahead of schedule; and, is now 98% leased out. We expect these to contribute extensively to the 2018 rental revenues.
(3) In just three (3) short years, Your Company now has over 102.7 hectares of landbank nationwide including 64 prime commercial provincial city center sites for CityMall. Once fully developed, the current landbank is estimated to provide close
to 93 hectares of leasable space or 77% of our enhanced 2020 vision of securing 1.2 million square meters of leasable space.
(4) Your Company's Statement of Financial Position reflects the Group’s stable financial growth. The total Assets of Your Company rose 28.5% year-on-year to
Php 64.3 Billion as your Company completes more of its projects which has driven a 42.7% increase in its Investment Properties, which stood at Php 46.4 Billion as of the end of 2017. Total Equity likewise increased by 10.4% to Php 22.3 Billion by the end of 2017 from Php 20.2 Billion in the prior year allowing Your Company to maintain a relatively low Gross Debt-to-Equity ratio of 1.48x vs. its debt covenant cap of 2.33x. These went hand in hand with a vast improvement in Your Company’s Debt Service Coverage Ratio (DSCR), which stood at 1.99x in 2017 vs. its debt covenant floor of 1.25x. DSCR measures Your Company’s ability to service its debt, in this case the amount of its consolidated EBITDA vs. its debt service requirements for the year.
(5) On the fund-raising side, we are pleased to announce that with the successful issuance of Php9.7 Billion of 7 year retail bonds in July 2017 and the recent completion of Your Company’s Php4.3 Billion re-IPO last July 2018, we have now fully secured ALL of the long-term funding requirements needed to fund our enhanced 2020 vision. Since Your Company’s IPO in April 2014, we have raised a grand total of Php45.8 Billion of peso-denominated long-term funds with fixed interest rates for 7-10 years and no key maturities until 2021. We have been very prudent in securing ideal financing terms that will protect Your Company from the rising interest rate environment and have been vey deliberate in our fund-raising
activities to ensure that we have diversified sources of financing, two-thirds of which were raised from the retail market, while the balance of one-third was contributed by 9 local banks with no key dependencies on any single lender.
(6) As for its hotel business, Your Company’s hotel revenues rose 404%
year-on-year to Php 397.5 Million vs. only Php 78.9 Million in 2016 due to the full year contribution of its hospitality subsidiary, Hotel of Asia Inc. ("HOA") in the same year. HOA currently has 866 operational rooms in its portfolio across its hotel properties that averaged 74.8% occupancy in 2017. Your Company envisions being one of the leading hotel players in the country and is looking to increase its hotel roombase to 5,000 hotel rooms by 2020 through the rollout of its homegrown brands, Hotel101 and Jinjiang Inn. In addition to its operational rooms, Your Company has secured another 2,829 hotel rooms in the pipeline namely Hotel101-Fort, Hotel101-Boracay, Hotel101-Davao, Hotel101-Bohol, JinJiang Inn Boracay
and JinJiang Inn Cagayan de Oro. The launch of Hotel101-Fort last March 2018 was exceptionally received by the market and we expect to report exciting numbers for the full year 2018 on back of stong Hotel101 pre-selling activities.
(7) Your Company’s most recent foray into the industrial warehousing business has also seen substantial traction as it has now secured two of the eight CentralHub sites it intends to initially develop by 2020. CentralHub Tarlac and CentralHub Iloilo both strategically located in main industrial areas will have a combined capacity of 54,000 sqm of warehouse space once fully built. Your Company will be developing these CentralHub sites in phases and is looking to have at least 100,000 sqm of leasable warehouse space across eight CentralHub sites in all major provinces contributing to its portfolio by 2020. CentralHub will lease out standardized multi-use warehouses suited for commissaries, cold storage, manufacturing, logistic and distribution centers.
We are personally pleased with the significant progress we have made in the past 4 years since our IPO. We came from having completed only 2,014 square meters of leasable space as of the end of 2014 to almost 600,000 square meters of leasable space slated for completion by the end of this year. From only having 1 CityMall site in April 2014, we now have 64 sites and over 102.7 hectares of landbank nationwide. From raising only Php1.1 Billion in IPO to now having raised Php45.8 Billion to complete our long-term funding requirements for our enhanced vision of 1.2 million square meters of leasable space by 2020.
Your Company, DoubleDragon is designed for growth. We will continue to grow our core business and push aggressively in areas where we see the highest potential likewise providing opportunities to the communities that we serve and the lives that we touch. We are continously inspired by the growth we have seen in the past four years as well as the ripple effect of the things that we do.
DoubleDragon's Management Team pour their hearts and souls, and continue to work passionately and relentlessly to achieve our great vision for Your Company. As we now conquer the challenging start-up years and transition into the growth and harvest years of Your Company, we know that we are only starting to see the onset of far greater things to come.
Thank you for your unwavering support and unyielding belief that we will always continue to deliver on our promises.
Yours truly,
DOUBLEDRAGON PROPERTIES CORP.
