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3 Things First Real Estate Investment Trust’s Management Wants You To Know About Its Growth

In the middle of January, First Real Estate Investment Trust (SGX: AW9U) released its 2017 fourth quarter and full year earnings update. As a quick introduction, First REIT currently 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.

The Manager of First REIT had given a presentation on the REIT’s latest results. In the presentation deck, I saw three slides on the REIT’s long-term business growth that I think investors should pay attention to.

The first slide shows First REIT’s gross revenue and net property income since 2007:


Source: First REIT 2017 fourth quarter earnings presentation

We can see that First REIT has managed to grow its gross revenue and net property income at really strong rates over the past decade. From 2007 to 2017, the REIT has achieved CAGRs (compound annual growth rates) of 14.7% for both gross revenue and net property income. This is an impressive track record, in my view.

The next slide I want to discuss shows how the REIT managed to grow its top-line over the years:


Source: First REIT 2017 fourth quarter earnings presentation

We can observe that First REIT has increased its assets under management by 15.3% annually from 2007 to 2017, which is an even higher growth rate than that seen for its gross revenue and net property income. As its assets under management grew over time, the REIT managed to collect higher rental income.

The last slide I want to talk about illustrates changes in First REIT’s distributable income:


Source: First REIT 2017 fourth quarter earnings presentation

It turns out that First REIT’s distributable income has also grown at a commendable pace from 2007 to 2017, rising by 13.2% per year. This show that most of the REIT’s higher rental income over the years had flowed to the bottom-line.

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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.