Saturday, April 24, 2010

First Reit posts 1.3% rise in distributable income in Q1 to $5.25m

FIRST Real Estate Investment Trust (First Reit) has posted a 1.3 per cent year-on-year rise in distributable income for its first quarter to $5.25 million, its manager Bowsprit Capital Corporation said yesterday.

Distribution per unit (DPU) for the quarter ended March 31 rose 1.1 per cent to 1.9 cents from 1.88 cents a year earlier.

Using an annualised DPU of 7.71 cents, distribution yield for the quarter is 8.9 per cent based on the Reit's closing price of 86.5 cents on April 21. First Reit will close its books at the end of the trading day on May 3 and pay out the distribution entitled to unitholders on May 27.

Its gross revenue increased 0.6 per cent to $7.5 million, while net property income inched up by 0.3 per cent to $7.34 million from the year-ago period.

Bowsprit Capital said that the marginal increase in gross revenue resulted from the deferment of rental income from its Adam Road Hospital property, which is undergoing redevelopment for a cancer centre under the name Pacific Cancer Centre @ Adam Road. This partly offset the higher rental income that was received from First Reit's Indonesia properties.

Including the deferred rental income, the Reit's gross revenue would have increased by 4.6 per cent to $7.7 million, said Bowsprit in a statement.

Late last month, Bowsprit said that it will expand its investment policy to include, among other things, medical clinics, pharmacies, laboratories and diagnostic facilities. It will also include real estate and real estate-related assets that are used in areas like healthcare research, education, lifestyle and wellness management, manufacture, drugs and other healthcare goods and devices. Its current investment policy is to own and invest in real estate and real estate-related assets in Asia that are primarily used for healthcare and healthcare-related purposes.

The expanded policy will come into play from May 2.

Said Bowsprit's chief executive Ronnie Tan on the expanded investment policy: 'The broader mandate will enable us to invest in a wider range of income-producing assets within the healthcare sector. The increased spread and diversity will enable us to improve the stability of returns to First Reit's unitholders.'

On top of the expansion of its investment policy, Bowsprit is looking to create more value-add for unitholders by making more investments in Indonesia.

'We also look forward to more investment opportunities from our sponsor, Lippo Karawaci, which has a pipeline of healthcare assets in Indonesia. Some of these may prove to be suitable and yield-accretive acquisitions for First Reit,' said Dr Tan.

He added that First Reit is unlikely to jump into China even though it is a market that offers vast opportunities.

'China is another market that offers much potential. But presently it looks like any healthcare asset acquisition there will require more evaluation and restructuring work for it to be able to meet First Reit's criteria.'

First Reit's current portfolio is made up of eight properties located in Indonesia and Singapore. In Indonesia, it has three hospitals under the Siloam Group name and a hotel. Its Singapore properties are made up of three nursing homes and the Pacific Cancer Center @ Adam Road, which will be completed by the middle of next year.

First Reit will keep to its payout policy of 100 per cent of distributable income for FY2010.

Yesterday, First Reit shares rose 0.6 per cent, or half a cent, to 87 cents.

Source: Business Times, 24 Apr 2010

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