DDMP sets occupancy goal of 95% by end of 2023

DDMP [DDMPR 1.29 unch; 54% avgVol] [link] said in a press release that it received P55 million in cash as a rental deposit for 15,100 sqm of new office space lease. DDMPR said that the total value of the leases is P799 million, and that the new leases are “expected” to form “part” of DDMPR’s goal of achieving 95% occupancy by the end of 2023. DDMPR has the lowest reported occupancy on the MB REIT Index at 81%, and a combined gross leasable area across its three buildings of 172,251 sqm. This means that DDMPR had approximately 32,700 sqm of unoccupied/leasable inventory prior to this signing.

MB bottom-line: The new batch of leases should drive DDMPR’s occupancy up to around 90%, meaning that DDMPR would need to lease out an additional 9,080 sqm of space over the next quarter to achieve that occupancy goal. For longtime bagholders of DDMPR (like me) who bought into this stock hoping that it would be injected with CentralHub logistics assets from its parent, DoubleDragon [DD 7.79, down 1.3%; 72% avgVol], any kind of change or movement is frankly kind of shocking. DDMPR has been basically the same since it was born. While all the other REITs injected assets, conducted additional fundraises, or issued bonds, DDMPR has been ominously silent and inactive the whole time, despite being the second REIT on the exchange. We bagholders have had our faces pressed to the glass of our DDMPR family’s home, watching all of the other REIT kids play and grow up in the streets, while we’re stuck inside nursing this terrible occupancy rate. Did all of that end today? It’s hard to say. The press release was written with weirdly distant language, focusing on the payment of a deposit rather than the lease contract, which made me feel like there’s something incomplete about this batch of leases. Maybe that’s just the trauma talking and I’m reading into it too much as though I cannot believe that something this different would happen to DDMPR. Even if the lease contracts were solid, there’s still the matter of trying to figure out what kind of annual and quarterly revenue these might represent. Like, how many years is this P799 million in value spread across? DDMPR makes (roughly) about P13,761/sqm per year in lease income, so for this batch to represent DDMPR’s “average” it would be approximately 3.8 years in length. It’s a great deal for DDMPR if the leases are for 3 years. It’s less of a great deal if the leases are actually for 4 years. In the end, though, I don’t care. Every single square meter of space that is not leased represents lost revenue, and in the REIT world, it’s a better problem to have low occupancy and low-ish per-square revenue than to have high occupancy and still low-ish per square revenue. I look forward to finding out more!

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