FirstREIT – BT

First Reit goes on acquisition trail

It aims to boost its asset portfolio to $500m by 2009

FOLLOWING the recent announcement by First Real Estate Investment Trust that its distributable income of $4.5 million for the second quarter exceeded forecasts by 3.8 per cent, the Reit is embarking on an acquisition trail to raise asset portfolio to $500 million by 2009.

Singapore’s first healthcare real estate investment trust recently completed its acquisition of Adam Road Hospital for $14.9 million.

With its first hospital acquisition in Singapore, earnings from hospitals will contribute further to First Reit’s revenues.

In the second quarter ended June 30, First Reit reported that net property income rose 8.6 per cent to $6.5 million on the back of maiden contributions from its three recently acquired nursing homes in Singapore.

‘We believe that our yield of 8.19 per cent continues to be one of the highest among Singapore Reits. With a clear focus in Asia’s booming healthcare sector, First Reit offers investors a unique and growing asset class which holds immense potential for yield and capital growth,’ said Bowsprit Capital Corporation chief executive Ronnie Tan, who manages the Reit.

Since its listing in December, First Reit has expanded its asset base by about 20 per cent and now holds eight healthcare assets totalling $308 million. It has four assets in Indonesia, three of which are hospitals. In Singapore it has three nursing homes and a hospital.

Dr Tan said: ‘We will continue to be fairly aggressive in looking for assets, not only in Indonesia and Singapore but we are very keen to look at Chinese assets. In the near term, China will present us with very good opportunities and we hope that in three to six months we will be able to firm up positions in China.’

In Singapore, First Reit will continue to look for further nursing homes. Dr Tan said they provide a stable business in the long term, due to Singapore’s ageing population.

The Singapore Reit is also exploring potential acquisitions with its Indonesian sponsor Lippo Karawaci. Possible projects include Siloam Hospitals Lippo Cikarang and Siloam Hospital Semanggi, which will house Indonesia’s first private cancer treatment centre.

To finance its acquisitions, First Reit has a $90 million term loan facility with OCBC. Including the latest acquisition of Adam Road Hospital, First Reit’s gearing stands at 16.5 per cent.

First Reit’s distribution per unit for the second quarter was 1.65 cents – 3.8 per cent above forecast. The Reit’s shares closed at 82 cents yesterday, up 1.2 per cent.