Two Reasons For Singapore Investors To Like First Real Estate Investment Trust Now

First Real Estate Investment Trust (SGX: AW9U) 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 sponsors are PT Lippo Karawaci Tbk and OUE Lippo Healthcare Limited.

First REIT’s stock is currently out of favor among investors. At its current price of S$1.00 (at the time of writing), First REIT’s shares are down by 30% from its high in the last 12 months.

Yet, despite the decline in share price, there are many reasons why the REIT might be a good investment for investors. Here are two reasons to like First REIT now.

Strong financial track record

Investors make money from REIT investments in two ways – increase in share price and sustainable distribution per unit (DPU) payout. Both factors, in turn, are driven by how well a REIT can sustain the income of its existing assets, as well as grow its assets, over the long term.

Here, First REIT has shown that it has the capability to grow its asset base over the long term. See chart below:

Source: First REIT’s earnings presentation

As a result of the growth in asset under management, First REIT’s distributable income has grown over the years. See the next chart below:

Source: First REIT’s earnings presentation

From the above, we can see that First REIT has delivered steady growth over the years, both in term of asset under management and distributable income.

Positive result for 2018

Not only did First REIT do well in growing its assets and income over the years, it continued to perform well in the latest financial year ended 31 December 2018.

Here are some numbers: Gross revenue increased 4.7% while its net property income (NPI) improved 4.5%, respectively, as compared to the same period last year. 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. Distributable income was 1.5% higher as compared to last year. Consequently, distribution per unit (DPU) came in higher by 0.4% year-on-year to 8.60 cents.

In other words, First REIT managed to sustain its good performance for another year.


In summary, the market is rather pessimistic with First REIT.  Yet, long term investors might find the REIT a good investment idea now due to the reasons mentioned above.

Lastly, if you enjoy the above arguments, read our final reason to like First REIT.

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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. Motley Fool has a recommendation for First Real Estate Investment Trust.