FirstREIT – ML

1Q08 results

1Q08 results
First REIT has reported 1Q08 results with DPU of 1.85cps, up 5% QoQ and 16% YoY. DPU growth is attributable to organic growth from the Indonesian portfolio together with income contribution from the Singapore assets which were purchased in 2007. Singapore now accounts for 17% of total portfolio assets.

Inline with ML estimates
The results were inline with ML estimates. Net profit for the quarter accounted for 25% of our FY08 estimate. Our earning forecasts remain unchanged however we have adjusted our dividend payout ratio from 90% to 100% as advised by management. First REIT is the highest yielding Singapore REIT offering a FY08E distribution yield of 10.4%

China expansion
During 2007 First REIT signed MOUs for 4 China assets which comprise a combined total of 1290 beds. We expect First REIT will be able to transact on at least one MOU in 1H08. We are positive on First REIT’s push to regionally diversify the existing healthcare portfolio.

Maintain Buy, PO S$0.84/share
We maintain our Buy rating and 12 month price objective of S$0.84/share. As one of only two Singapore listed Healthcare REITs, we believe First REIT has access to a wide range of Healthcare related assets both in Singapore and regionally.