The 11-story tower of Double Dragon Meridian Park REIT (DDMPR) is expected to be ground zero of the real estate calamity arising from the proposed ban on Philippine Offshore Gaming Operations (POGO).
DDMPR, controlled by ultra bilyonaryo Tony Tan Caktiong and his partner Injap Sia, has by far the biggest exposure to POGOs among the country’s biggest property developers.
POGOs account for 65 percent of DDMPR’s total gross leasable area (GLA) of 172,252 square meters spread over six, 11-storey towers in the Bay Area where property prices have zoomed with the influx of POGO players from 2016 to 2019.
The second most vulnerable to a POGO exit, Filinvest Land Inc. (FLI) of the Gotianuns, only has a seven percent exposure to POGOs.
“We believe that its superior yield of 8.6 percent (second highest among listed REITs) does not compensate for the risks from its outsized exposure to POGOs,” said Abacus Securities.
DDMPR is down 45 percent to P1.24 from its initial public offer price of P2.25. All of the P14.7 billion raised from the IPO in March 2021 went to Tan Caktiong, Sia and the Yujuicos.
Property consultant David Leechiu said POGO office footprint has dwindled from 1.7 million square meters to 1.05 million due to the pandemic and tighter government restrictions.
Leechiu said a proposal by some lawmakers and government officials to ban POGOs could lead to as much as 80 percent drop in rental rates, not counting the estimated annual economic losses of P200 billion and 111,000 Filipinos swelling the ranks of unemployed.
POGOs account for 7.4 percent of the country’s total office supply and a total ban could push vacancy rate to a record high of over 25 percent from 18.1 percent as of June 2022.