Highlights from First REIT’s Second Quarter Earnings

First REIT (SGX: AW9U), which is Singapore’s first healthcare-related real estate investment trust, released its second quarter earnings yesterday. At last count, the REIT owns 15 properties in total in Indonesia, Singapore, and South Korea.

Let’s take a look at some salient points from First REIT’s earnings release.

For the quarter, gross revenue increased 14.5% year-on year from S$20.1 million to S$23.0 million while net property income went up 15.4% from S$19.7 million to S$22.7 million. The increase was due to contributions from Siloam Hospitals Bali and Siloam Hospitals TB Simatupang (the latter was acquired last May). In addition, a maiden contribution from Siloam Hospitals Purwakarta, which was acquired this May, also helped chip in.

The REIT’s distribution per unit (DPU) for the quarter was at 2.0 Singapore cents, a rise of 8.1% over the previous year. It also represents the highest quarterly DPU the REIT has doled out since it was listed in 2006.

As of 30 June 2014, the gearing ratio of First REIT stood at 32.9%, a slight increase from 32.3% seen six months ago. Incidentally, the REIT has a aim to “maintain its long term gearing at an optimal level not exceeding 30%.”

First REIT ended the quarter with a net asset value per unit of 97.03 Singapore cents.

Dr Ronnie Tan, Chief Executive Officer of First REIT’s manager, was upbeat about the trust’s performance. He commented on the quarter’s results:

“We have delivered our highest DPU since listing, hitting the 2.00 cents mark. We are pleased with how the Trust has panned out, with strong performance from our assets which we have increased to 15 properties on the completion of our latest acquisition, Siloam Hospitals Purwakarta.”

Going forward, there are potential asset enhancement initiatives for three of the REIT’s properties, namely the Siloam Hospitals Surabaya, Siloam Hospitals Kebon Jeruk, and Imperial Aryaduta Hotel & Country Club. Furthermore, the REIT’s sponsor, Lippo Karawaci, an Indonesian conglomerate listed in the country, has a strong pipeline of 24 quality hospitals which could potentially be acquired by the REIT.

Units at First REIT closed at S$1.215 on Tuesday, translating to a price-to-book ratio of 1.3. Its distribution yield stands at 6.5%, which took into account the latest DPU and the DPU of the previous three quarters.

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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.