Highlights for First REIT’s Healthy First Quarter

First REIT (SGX: AW9U), Singapore’s first healthcare-related real estate investment trust (REIT) with 14 properties in Indonesia, Singapore and South Korea, had just declared a clean bill of health if its latest first quarter results are anything to go by.

Quarterly gross revenue increased by 28.3% year-on-year to S$22.5 million, while net property income surged 29.6% to S$22.2 million. There was a 22.3% rise in distributions to S$14.2 million as compared to the previous year. As a result,  the REIT’s distribution per unit (DPU) had increased by 14.4% to 1.99 Singapore cents versus the DPU of 1.74 Singapore cents a year ago.

First REIT’s good showing was due largely to contributions from its newly acquired Indonesian assets,  Siloam Hospitals Bali (SHBL) and Siloam Hospitals TB Simatupang (SHTS). Those two hospitals came on board in May last year.

As of 31 March 2014, the gearing at First REIT stood at around 32%, unchanged from the previous quarter. The REIT’s net asset value however, declined slightly from 96.64 Singapore cents (as of 31 Dec 2013) to 96.49 Singapore cents.

The healthcare REIT expects the Indonesian political elections this year to not cause any drastic change in regulations or policy within the healthcare industry in the short to medium term.

First REIT’s sponsor, Lippo Karawaci, has a strong pipeline of 24 hospitals from which the REIT can explore for potential acquisitions. In Singapore, over 11,000 new hospital and nursing home beds are expected to be added and this may bode well for First REIT in terms of acquisition opportunities; the REIT already owns three nursing homes in our sunny island.

Dr Ronnie Tan, Chief Executive Officer of the manager of First REIT, commented on the quarter’s result, “We are pleased to deliver a strong first quarter with solid and growing DPU to our investors. After achieving our significant milestone of over S$1 billion in asset size, we are progressing quickly with the proposed acquisition of our latest high-quality asset in Indonesia, Siloam Hospitals Purwakarta. This will increase our portfolio to 15 properties and broadens our asset size by 3.8% to S$1.09 billion.”

First REIT closed at $1.12 on Monday. It currently trades at a price-to-book ratio of 1.2 and fetches a dividend yield of 7%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.