FirstREIT – BT

First Reit beats Q4 forecast with $4.8m distributable income

FIRST Reit, Singapore’s first healthcare real estate investment trust (Reit), has reported distributable income of $4.8 million and a distribution per unit (DPU) of 1.76 cents for the fourth quarter ended Dec 31, 2007.

This exceeds its forecasts by 9.1 and 9.3 per cent respectively.

On a full-year basis, distributable income was $18.3 million and DPU was 6.73 cents, exceeding its forecasts by 5.6 and 5.7 per cent respectively.

Based on the closing price of 75 cents per unit on Jan 18, the full-year DPU represented a distribution yield of 9 per cent, said First Reit.

Ronnie Tan, chief executive of First Reit’s manager Bowsprit Capital Corporation, said: ‘We believe that our yield of 9 per cent remains one of the highest among the Singapore Reits (S-Reits) and this, in our opinion, is an attractive proposition.’

For the quarter, net property income was $7.2 million, 18.6 per cent above its forecast.

First Reit, which is sponsored by Lippo Karawaci, has assets in Indonesia and Singapore. A recent independent valuation put its asset value at $325.6 million, representing an increase of $17.6 million over the book value as at Sept 30, 2007.

Dr Tan said: ‘We will continue to work with our sponsor, Lippo Karawaci, in Indonesia. In addition, China will also remain a key focus in our acquisition pipeline as we believe that the healthcare needs in the country will continue to grow exponentially as income rises.’

Of the four memoranda of understanding for Chinese asset acquisitions it previously announced, Dr Tan said that it expects to conclude at least one acquisition in the second quarter of this year.

Noting that regulations have opened the way for possible consolidation in the S-Reit market, Dr Tan also said: ‘We are all for consolidation.’

The target portfolio size for First Reit is $400 million in 2008 and $500 million in 2009.

In terms of asset enhancement, Dr Tan said that it had recently submitted for regulatory approval plans for the redevelopment of its Adam Road Hospital, which has a 1.4 plot ratio. He added that First Reit could also sell units of the redeveloped hospital.

First Reit closed trading yesterday at 72 cents per unit, down two cents.