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First Real Estate Investment Trust’s Latest Earnings: Steady Growth in Distribution Per Unit for 2017

First Real Estate Investment Trust (SGX: AW9U) is Singapore’s first healthcare real estate investment trust (REIT) with a portfolio of 20 properties located in Indonesia, Singapore and South Korea. The REIT’s sponsor is Indonesia-listed PT Lippo Karawaci Tbk, the country’s largest listed property outfit.

Yesterday, the REIT announced its financial results for the full year ended 31 December 2017 (FY2017).

Here’s a quick rundown on the numbers from the earnings release:

1. Gross revenue for FY2017 grew 3.7% year-on-year to slightly below S$111 million.

2. Net property income (NPI) rose 3.4% to S$109.5 million.

3. Distributable income increased 2.3% to S$66.7 million.

4. The distribution per unit (DPU) for the year was 8.57 cents, up 1.2% from 8.47 cents seen in FY2016.

5. As at 31 December 2017, the net asset value (NAV) per unit was 101.47 cents. This is a rise from 100.79 cents seen at the end of 2016.

The growth in gross revenue was largely due to contributions from Siloam Hospitals Labuan Bajo (SHLB), Siloam Hospitals Buton and Lippo Plaza Buton (SHBN) and Siloam Hospitals Yogyakarta (SHYG) as well as from existing assets. SHLB was acquired in December 2016 while SHBN and SHYG were purchased in October 2017 and December 2017 respectively.

Victor Tan, the chief executive of the REIT’s manager, said:

“Our growing yield-accretive acquisitions have made a positive impact to First REIT’s performance, delivering consecutive years of record DPU to our unitholders.”

Indeed, unitholders of First REIT have had the privilege of enjoying consistently increasing DPU over the years as seen from the slide below:

Source: First REIT’s Earnings Presentation

As at 31 December 2017, the trust had a gearing of 33.6%, an increase from 31.1% seen at the end of FY2016. However, the current gearing is still well below the regulatory limit of 45%.

Looking ahead, First REIT’s manager said:

“Against the stronger economic outlook and the on-going national health insurance scheme, demand for better quality private healthcare will continue to grow steadily. First REIT remains well-positioned for further growth, with a strong acquisition pipeline of 39 hospitals in Indonesia from its Sponsor, PT Lippo Karawaci Tbk.”

The following gives us some colour on the assets available for acquisition by the REIT:

Source: First REIT’s Earnings Presentation

Units of the healthcare REIT are selling at S$1.41 now. This gives a price-to-book ratio of 1.4 and a trailing distribution yield of 6.1%.

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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.