First Real Estate Investment Trust’s Latest Earnings: What Investors Should Know
First Real Estate Investment Trust (SGX: AW9U), or First REIT, just released its financial results for the second quarter ended 30 June 2017. The reporting period was from 1 April 2017 to 30 June 2017.
First REIT is Singapore’s first healthcare REIT with 18 properties located in Indonesia, Singapore and South Korea. In our country, it owns three properties and they are Pacific Healthcare Nursing Home @ Bukit Merah, Pacific Healthcare Nursing Home II @ Bukit Panjang, and The Lentor Residence. Meanwhile, 14 properties are situated in Indonesia and one property – Sarang Hospital – is in South Korea. The sponsor of the REIT is PT Lippo Karawaci Tbk, Indonesia’s largest listed property company.
With that, here’s a quick rundown First REIT’s latest financial figures:
1. Gross revenue came in at S$27.5 million for the second quarter. This was a 3.3% year-on-year rise.
2. Net property income (NPI) went up 3.2% year-on-year to S$27.2 million.
3. The reporting quarter’s distribution per unit (DPU) was at 2.14 cents, up from 2.11 cents seen a year ago.
4. The net asset value (NAV) per unit was at S$1.004, as of 30 June 2017. This was a slight dip when compared to 31 December 2016, where the figure stood at S$1.008.
Full quarter contribution from the recently acquired Siloam Hospitals Labuan Bajo (SHLB) and higher rental income from the existing properties helped to increase the REIT’s gross revenue and NPI.
As of 30 June 2017, First REIT had a gearing ratio of 31%. This is comparable to the gearing it had at the end of last year. It is noteworthy that 90.9% of its debt is on a fixed rate basis, which will help to cushion the impact of interest rate hikes in the future.
Mr Victor Tan, the Acting Chief Executive Officer of the Manager of the REIT, said:
“First REIT’s strategic focus in acquiring yield-accretive and high quality assets has yielded income stability and growth, allowing the Trust to deliver consistently growing DPU to our Unitholders. Following the acquisition of SHLB in December last year, and with our sponsor, PT Lippo Karawaci Tbk’s strong pipeline of over 40 healthcare assets in Indonesia for acquisition, the Trust plans to acquire one or two high-quality properties this year to further boost our income stream.”
The following slide from the earnings presentation clues us in on the assets available for acquisition for the REIT:
Source: First REIT’s Earnings Presentation
First REIT also commented about its healthcare sector in Indonesia:
“The healthcare sector will continue to benefit from the ongoing national health insurance scheme, which will boost demand among the rising middle-income class in Indonesia for better quality private healthcare.”
The REIT closed at S$1.335 on Monday. This translates to a historical price-to-book ratio of 1.33 and a trailing yield of 6.4%.