3 Slides Investors Should See From First Real Estate Investment Trust

First Real Estate Investment Trust (SGX: AW9U), or First REIT, is a healthcare-focused real estate investment trust.

It currently has a portfolio of 19 properties (14 in Indonesia, three in Singapore, and one in South Korea) that are mostly healthcare-related facilities. The REIT’s sponsor is Indonesia’s largest listed property company, PT Lippo Karawaci Tbk.

The REIT has recently gave a presentation on its 2017 third-quarter results. In this article, I will share three useful slides from the presentation.

Overall results for 3Q 2017

Source: First REIT 3Q FY17 Presentation

Overall, we can see that all metrics have improved, both on quarterly and year-to-date basis, as compared to last year.

The stronger quarterly performance was driven by contribution from Siloam Hospitals Labuan Bajo, as well as higher rental income across the board from its existing properties.

Distribution per unit (DPU) trend

Source: First REIT 3Q FY17 Presentation

The above is a quick summary of the DPU trend from 2011 to 2017. DPU is what investors receive as income from their investments in a REIT, therefore, it is important that investors invest in a REIT that can grow its DPU over time.

In this case, what’s useful to note is that First REIT has continued to grow its DPU since 2011. During this period, DPU has risen from 1.58 cents in the 2011 first quarter to 2.14 cents in the latest quarter.

To put the above into perspective, DPU has risen by 35.4% during the period.

Lease Expiry Profile

Source: First REIT 3Q FY17 Presentation

One of the key attributes that investors pay attention to when investing in a business is the sustainability of income. Many factors will contribute towards the long term sustainability of a REIT’s income. Lease expiry profile is one of those factors.

What is useful to note here is that no lease will expire in the next three years. What’s more, roughly 76% of the leases will not expire until five years later, with 56.3% of all leases to expire only after 10 years.

Such long lease profile should provide investors some assurance that First REIT is likely be able to sustain its current income for many years to come.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.