DoubleDragon Corporation (stock: DD) is gearing up for its upcoming “OTSO BUENAS” retail bond offering, a strategic move aimed at expanding its investor base while supporting its growth into one of the Philippines’ top-tier property and hospitality companies. This bond offering, set for November 2024, will serve as the first tranche of DoubleDragon’s larger PHP 30-billion shelf registration retail bonds program. Backed by a high credit rating and offering an attractive interest rate, DoubleDragon’s bond issuance stands out as an investment opportunity amid the current low-interest-rate environment.
The OTSO BUENAS retail bonds are structured with a 5.5-year tenor and an 8% annual interest rate, a competitive rate that could be one of the last high-yield offerings from the company for the foreseeable future, according to DoubleDragon Chairman Edgar Injap Sia II. Each bond will have a minimum investment denomination of PHP 50,000, making it accessible to a broad range of retail investors across the country. Additionally, DoubleDragon secured the PRS Aaa rating from Philippine Rating Services Corporation (PhilRatings) — the highest rating awarded to debt issuances, indicating minimal credit risk.
This high rating, paired with an 8% yield, positions the bond as an attractive choice for investors seeking stable, long-term returns. Notably, bonds with a PRS Aaa rating come with a stable outlook, meaning that credit quality is expected to remain steady over the coming year, making it a low-risk choice even in a volatile market.
The 8% interest rate on this retail bond offering is a compelling feature, especially in today’s lower interest-rate landscape. With the Bangko Sentral ng Pilipinas recently lowering benchmark rates by a total of 50 basis points this year, many investment-grade bonds now yield significantly less. In this context, DoubleDragon’s offer could represent a final chance for investors to secure a high-yield instrument before further rate adjustments push corporate bond yields lower.
For the past decade, DoubleDragon has strategically raised capital to build a hard asset portfolio that includes over 1.3 million square meters of gross floor area (GFA) across the Philippines. This expansion, through assets like CityMall community centers, DD Meridian Park offices, and CentralHub industrial complexes, has enabled DoubleDragon to generate steady rental income, bolstering its cash flows.
However, what truly sets DoubleDragon apart in the industry is its asset-light business model through Hotel101. Unlike traditional hotel models, where companies invest heavily in property acquisition and development, DoubleDragon has embraced a scalable approach. Hotel101 properties consist of uniform hotel rooms with around 500 rooms per site, allowing for efficient operations and cost savings. The business model, which includes revenue from pre-sales of hotel units and long-term income from hotel operations, gives DoubleDragon a dual income stream, positioning it uniquely for growth both domestically and internationally.
DoubleDragon’s ambitions extend beyond the Philippines through its global arm, Hotel101 Global. By 2050, the company aims to have one million operating hotel rooms worldwide, with 50,000 rooms in the Philippines alone. Initial international projects in Spain, Japan, and the United States are underway, with an expected USD 471 million in foreign currency revenues projected from these developments. This move not only diversifies DoubleDragon’s revenue but also supports the Philippine economy by attracting foreign currency inflows.
One of the distinctive aspects of Hotel101’s asset-light model is its portability. This scalability allows DoubleDragon to quickly enter and expand in new markets without the traditional capital constraints associated with global hotel chains. By standardizing hotel room layouts, furnishings, and operational processes, DoubleDragon can replicate the Hotel101 model efficiently, aligning with global travel demands while maintaining profitability.
As DoubleDragon continues its expansion, its upcoming PHP 5 billion bond issuance, with an option to increase to PHP 10 billion in case of high demand, is a key step in securing additional capital for its ventures. Over the next two years, DoubleDragon plans to roll out additional tranches under its PHP 30-billion bond program, with offerings likely at lower interest rates of 7% and 6% for 2025 and 2026, respectively. This future planning ensures that DoubleDragon can maintain a strong liquidity position as it builds towards its 2025 goal of becoming a Tier-1 mature company.
By end-2024, DoubleDragon’s total equity is anticipated to surpass PHP 100 billion, marking a milestone as one of the few Philippine corporations with this level of equity capitalization. This growth is backed by a nationwide portfolio of titled assets in Luzon, Visayas, and Mindanao, estimated to reach over PHP 250 billion in asset value by 2030, excluding overseas investments.
DoubleDragon’s OTSO BUENAS retail bond offering is not only a financial instrument but also a step toward widening its investor base and further strengthening its societal impact. With a strategic balance of hard assets and asset-light models, DoubleDragon is well-positioned to become a leading player in the Philippine real estate sector and, through Hotel101, a notable brand on the global hospitality stage. For investors, the bonds represent a compelling opportunity to align with a company that has demonstrated resilience, strategic vision, and a commitment to sustainable growth both locally and internationally.
Key Takeaways
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DoubleDragon’s OTSO BUENAS retail bond offers an attractive 8% interest rate with a PRS Aaa rating, providing a rare high-yield investment option amid current low-interest-rate conditions.
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With over 1.3 million square meters of prime assets and a diversified real estate portfolio across the Philippines, DoubleDragon has built a stable base of recurring revenues through retail, office, industrial, and hotel properties.
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The Hotel101 brand uses an innovative asset-light model, offering dual revenue streams from pre-sales and hotel operations, positioning DoubleDragon for agile growth in both domestic and international markets.
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Through Hotel101 Global, DoubleDragon aims to contribute significantly to foreign currency inflows for the Philippines, with projects already underway in Spain, Japan, and the U.S., expected to generate over USD 471 million.
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Projected total equity exceeding PHP 100 billion by 2024 and a pipeline of strategic bond issuances underscore DoubleDragon’s preparation for sustainable growth as it seeks to become a Tier-1 mature company by 2025.
These points underscore DoubleDragon’s growth strategy, from the upcoming high-yield bond offering to its long-term vision of international expansion and resilient revenue models. For investors and stakeholders, DoubleDragon’s comprehensive approach presents a unique opportunity for meaningful and sustained returns.