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9 Quick Things Investors Should Know About First Real Estate Investment Trust’s Latest Earnings

Last week, First Real Estate Investment Trust (SGX: AW9U) released its 2017 fourth quarter and full year earnings update. As a quick introduction, the REIT has a portfolio of 20 properties (16 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.

Here are nine things investors should know about First REIT’s latest results:

1. Gross revenue for the reporting quarter grew 5.8% year-on-year to S$28.55 million, while net property income improved by 4.9% to S$27.99 million.

2. The top-line growth flowed to the bottom-line as First REIT’s distribution per unit (DPU) increased by 0.9% to 2.15 cents compared to a year ago.

3. Based on First REIT’s DPU of 8.57 cents for 2017, and its closing unit price of S$1.41 as of 19 January 2018, the REIT has a trailing distribution yield of 6.1%

4. As of 31 December 2017, First REIT’s gearing stood at 33.6%, which is low compared to the regulatory gearing ceiling of 45%.

5. The REIT’s portfolio has a 100% committed occupancy rate.

6. First REIT has a long lease expiry profile, with 22% of its leases expiring in three to five years, 32.1% expiring within 10 years, and 45.9% expiring after 10 years.

7. First REIT has right of first refusal on Lippo Karawaci’s healthcare properties. The REIT’s sponsor has 31 hosptials under the Siloam Hospitals network, and 40 hospitals in the pipeline.

8. Three acquisitions were completed in the fourth quarter of 2017. They are the 10 October 2017 purchases of Siloam Hospitals Buton and Lippo Plaza Buton for S$28.5 million, and the 22 December 2017 purchase of Siloam Hospitals Yogyakarta for S$27.0 million.

9. The following is the outlook provided by First REIT in its earnings update:

“The Indonesian gross domestic product grew 5.06% year-on-year in the third quarter of 2017, compared with 5.01% in the first and second quarters. This was led mainly by a 3.46% rise in government spending and a 7.11% rise in investment in the third quarter. Over the course of 2017, Bank Indonesia has been very supportive of economic growth and lending, having cut interest rates eight times in 2017.

Looking into 2018, the government expects Indonesia’s economy to grow by 5.4%2, supported by an export recovery and rising investment, especially with its investment grade rating received from all three major rating agencies.

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.”

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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.