First Real Estate Investment Trust (SGX: AW9U) is Singapore’s first healthcare real estate investment trust (REIT). It currently has a portfolio of 20 properties located in Indonesia, Singapore, and South Korea, and its sponsor is the Indonesia-listed PT Lippo Karawaci Tbk, the country’s largest listed property company.
Yesterday, the REIT announced its financial results for the first quarter of 2018 (the three months ended 31 March 2018).
Gross revenue for the quarter rose 5.8% year-on-year to S$28.7 million. The improvement was primarily due to contributions from the newly-acquired Siloam Hospitals Buton & Lippo Plaza Buton, and Siloam Hospitals Yogyakarta, as well as increased rental income from existing properties in Singapore and Indonesia. Consequently, net property income grew 5.8% to S$28.4 million.
Distributable income to unitholders went up from S$16.6 million to S$16.9 million, an increase of 1.8% year-on-year. Distribution per unit inched up 0.5%, from 2.14 Singapore cents last year to 2.15 Singapore cents.
As of 31 March 2018, First REIT’s net asset value per unit stood at S$1.014, down from S$1.0147 seen at the end of December 2017. The REIT had a gearing ratio of 34.1% at the end of the reporting quarter, up slightly from 33.6% at the end of 2017, but still well below the 45% regulatory limit.
Looking ahead, Victor Tan, the chief executive of the REIT’s manager, said:
“Our long-term strategy of making yield-accretive acquisitions has allowed the Trust to grow its returns steadily over the years. Going forward, we will continue to uphold this strategy, maintain our resilient rental structure and manage our capital resources prudently to further enhance income stability and maximise returns to Unitholders.”
First REIT has around 40 hospitals in Indonesia that it can acquire from its sponsor. This, together with the rising demand for private healthcare in the country due to the “growing nationwide adoption of the national health insurance scheme,” should bode well for the REIT in the long-term.
First REIT’s units ended Tuesday at S$1.37 each, giving the REIT a price-to-book ratio of 1.35 and a trailing distribution yield of 6.3%.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended units of First Real Estate Investment Trust. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.