FirstREIT – SGX
First REIT acquires 3rd Singapore nursing home (51 Lentor Avenue) for S$12.8 million
- Marks the Group’s 4th acquisition in Singapore
- Expected incremental annualized distribution per unit of 0.067 Singapore cents
SINGAPORE – 1 June 2007 – First Real Estate Investment Trust (“First REIT”), Singapore’s first healthcare real estate investment trust, announced that it has entered into a conditional Option Agreement (“Option Agreement”) for the acquisition and lease of a nursing home at 51 Lentor Avenue (the “Property”) for S$12.8 million.
This latest move follows First REIT’s acquisition of two nursing homes and a hospital in Singapore in January 2007.
The Option Agreement was entered into with the Vendor – Sphere Investment Pte Ltd, which currently owns the four storey custom-built 148-bed nursing home with a land area of 2,485.6 square metres and gross floor area of 2,982.721 square metres. Upon the completion of the acquisition, First REIT will in turn lease the Property to First Lentor Residence Pte Ltd for 10 years at a commencement rental income of S$998,400 per annum, with an option to renew the lease before the expiry. In addition, First REIT will enjoy annual step up rental increases in the subsequent years for up to 10 years.First REIT, which expects the acquisition to be completed by June 2007, estimates that Property will give rise to an incremental annualised distribution per unit (“DPU”) of 0.067 cents.
“This acquisition will represent our third nursing home in Singapore. We will continue to identify acquisition targets for modern and purpose-built nursing homes in Singapore as they provide relatively high yield with stable and high occupancy,” said Dr Ronnie Tan, Chief Executive Officer of Bowsprit Capital Corporation Limited, as manager of First REIT (the “Manager”).
Dr Tan added, “Not only will this acquisition further strengthen our income stream, it will also enlarge First REIT’s asset portfolio, raising it to S$293.1 million once the deal is completed. This will expand our asset base by 14% since our IPO in December 2006. Our investment goal is clear – to grow our asset base to S$500 million within 3 years from the initial public offer, focusing on quality healthcare assets in Asia. Based on the acquisition momentum we have set, and the pipeline of acquisitions which we are currently negotiating, we believe we are on track to achieve our target.”
The acquisition will be fully funded by debt via the proceeds of a S$90 million term loan from Oversea-Chinese Banking Corporation set up on 11 January 2007. Assuming that the acquisition is successfully completed by June 2007, First REIT’s gearing will be raised from the current 7.88% to 11.68% as at 30 June 2007.
“Our gearing after the acquisition will still be relatively low, giving us financing flexibility to undertake more acquisitions that fit in with our strategy. We will continue to look out for quality healthcare assets in different parts of Asia so as to reduce our reliance on any single country or type of tenants,” added Dr Tan.
First REIT believes that it is well positioned to benefit from Asia’s growing healthcare industry, supported by rising life expectancies in the region, increasing consolidation within the Asian healthcare industry, as well as the growing demand for healthcare services. Itremains confident of delivering on its FY2007 forecast distribution of 6.51 cents as indicated in First REIT’s prospectus dated 4 December 2006.
Source : SGX