FIRST Real Estate Investment Trust (First Reit), Singapore’s first healthcare real estate investment trust, posted a distributable income of $5.3 million for the fourth quarter ended Dec 31, 2009, down 0.6 per cent from a year ago, its manager Bowsprit Capital Corporation reported yesterday.
Distribution per unit (DPU) for Q4 2009 was one per cent lower at 1.92 cents. Based on its closing price of 86 cents on Jan 20, 2010 and the annualised DPU of 7.62 cents, First Reit said that it has a distribution yield of 8.86 per cent.
Gross revenue and net property income inched up 1.4 per cent and 1.2 per cent to $7.7 million and $7.6 million, respectively.
On a full-year basis, distributable income increased 0.6 per cent to $21 million on the back of a 0.7 per cent rise in gross revenue to $30.2 million.
‘The recent global recession has demonstrated the resilience of the healthcare business, particularly in Asia which continues to perform well,’ Bowsprit said. First Reit’s portfolio consists of eight properties located in Indonesia and Singapore.
‘We are heartened that our hospitals in Indonesia have continued to perform well despite the global financial crisis last year. The variable rental component, in addition to the fixed annual rental escalation, will mean higher revenue to be generated by our Indonesian assets for FY2010,’ said Ronnie Tan, Bowsprit’s chief executive officer.
In Indonesia, First Reit’s Siloam Group of hospitals has witnessed robust growth in demand for services and higher occupancy, it said.
In Singapore, where First Reit owns three nursing homes, the group reported that prospects for private nursing care are bright in view of a steadily aging population and the government’s recent push to boost and raise awareness of palliative care services. ‘All these factors will help to underscore the current and future demand for quality nursing homes and eldercare facilities for short and long-term convalescent, respite and rehabilitative care’.
The Reit will continue to look at ways to enhance its nursing homes in Singapore. Plans are being proposed for extension works at the Lentor Residence. First Reit has also commenced comprehensive asset enhancement works for its Adam Road Hospital since November last year with completion targeted for mid-2011.
The cost of asset enhancement works, estimated at $18.6 million, will be funded through debt, and will raise First Reit’s gearing from 15.5 per cent as at Dec 31, 2009 to just below 20 per cent upon completion – which will still be lower than the regulatory limit of 35 per cent.
‘Our tight capital management and low gearing, coupled with the fact there is no refinancing requirement until 2012, have provided First Reit with ample headroom to pursue acquisition opportunities and carry out further asset enhancement works to provide best-in-class service for our patients. With improving market conditions, we are currently exploring acquisition opportunities with our sponsor, PT Lippo Karawaci Tbk and other third parties to expand our portfolio of yield accretive properties and raise our overall asset base,’ said Dr Tan.
As at Dec 26, 2009, First Reit’s eight properties were revalued at $340.9 million, representing an increase of $16 million over book value as at end December 2008.
First Reit will maintain a payout policy of 100 per cent of distributable income for FY2010.
The Reit last traded at 86 cents.
Source: Business Times, 23 Jan 2010