Fast-food giant Jollibee Foods Corp. (JFC) on Thursday said it is consolidating its land properties in exchange for shares in Central Hub Industrial Centers Inc., a unit of property developer DoubleDragon Properties Corp., in a P3.97-billion deal.
Jollibee’s board approved the plan to carve out certain parcels of its land properties worth about P2 billion and invest some P1.9 billion in cash in Central Hub Industrial, which it hopes to eventually transform into a real estate investment trust company (REIT). JFC is targeting to list its REIT on the Philippine Stock Exchange next year.
The company will acquire common shares of Central Hub, and infuse its 16.4 hectares of industrial properties currently utilized as its commissaries.
Jollibee Chairman Tony Tan Caktiong said the overall plan is to reduce assets tied to real estate properties by converting some of these into securities in REIT and by selling others directly to third parties.
“We will use the proceeds from the eventual IPO [initial public offering] of Central Hub to finance real estate investments for our new stores and commissaries which we will convert again into more investments and shares in the REIT,” Tan said in a statement.
“Basically, the REIT will help continuously finance our future expansion while the REIT will keep growing in the years ahead allowing more public investors to buy more REIT shares. This is a more cost-effective way of financing versus owning or pure leasing of properties due to the cash dividends JFC will receive from the REIT which will include the benefits and incentives provided by law to the REIT.”
The Central Hub will have its own property and fund managers, the company said.
“This will allow JFC to focus on growing its core business in food service, restaurant operations and food processing. We will continue to focus on our core business. We are also very pleased to be a contributor to the growth of the economy, the real estate industry and the capital markets through our investments in the REIT,” Tan said.
The additional commissary assets to be infused will increase the total industrial land portfolio of Central Hub to 39.8 hectares.
Tan Caktiong is also the co-chairman of DoubleDragon.
“We are excited to work together with Jollibee in developing Central Hub into the largest landlord of industrial warehouses in the country. We see Central Hub to become a major recurring income contributor to Double Dragon,” DoubleDragon Chairman Edgar “Injap” Sia II.
Central Hub is a portfolio of industrial warehouse complexes suited for use as a warehouse, commissary, cold storage facility and logistics distribution center.
Jollibee’s board has approved the cash subscription by the company to some 1.56 billion common shares of Central Hub. As part of its investment plan, Jollibee intends to make an asset infusion into Central Hub in exchange for additional common shares of the company. The assets for infusion shall be valued based on the appraisal report of an independent appraisal company engaged by Jollibee.
Meanwhile, the Jollibee Group has started rolling out its vaccination program, which provides its employees with free Covid-19 vaccines. The vaccination of employees is being held at Xavier School in San Juan. This is the first batch of vaccinees under its employee inoculation program which covers teams from Jollibee, Chowking, Mang Inasal, Greenwich, Burger King, Red Ribbon, Panda Express, PHO24, commissaries, distribution centers, support functions, and the Jollibee Group Foundation.
In line with government guidelines, the Jollibee Group has prioritized employees belonging to the A2 and A3 categories, as well as its economic frontliners such as store crew and commissary team members who belong to the A4 priority group in regions that have been identified as the focus areas of the national vaccination program.
Aside from its employees, the company also extended the free vaccines to its franchisees and partner employers, as well as to its employees’ dependents and household members.