FirstREIT – BT

Fortis acquires First Reit property for $33m

SOME seven months after bowing out of the take-over battle for Parkway Holdings, Indian billionaires Malvinder and Shivinder Singh are re-entering Singapore’s healthcare scene with the $33 million acquisition of an upcoming cancer hospital from First Real Estate Investment Trust (First Reit).

The purchase – to be funded by internal resources and completed by March – is being made via Fortis Global Healthcare, which is owned by the Singh family.

The hospital under development at No 19 Adam Road is a proposed three-storey Cancer Centre. The sale will provide First REIT with a net cash gain of about $8.3 million (after subtracting divestment fees, related costs and repayment of loans).

‘The sale proceeds will provide First Reit with greater financial flexibility to pursue other possible attractive acquisition opportunities and/or to repay debt,’ First Reit’s manager Bowsprit Capital Corporation said in an announcement to the Singapore Exchange. It will also reduce First Reit’s gearing from 17.6 per cent to 14.2 per cent.

At $33 million, the sale is 17 per cent above the property’s latest valuation of $28.2 million as at Dec 28 last year by CB Richard Ellis and 52.1 per cent higher than its cost of $21.7 million as at Dec 31 last year.

Speaking to BT yesterday, Fortis Global’s CEO Vishal Bali said that the company is creating verticals around different specialities in line with its vision to be an integrated healthcare provider.

According to Mr Bali, Fortis Global plans to tweak the existing design of the facility and the hospital is likely to come on-stream in the second or third quarter of next year.

‘We are also looking at future expansion in Singapore,’ Mr Bali went on to say, but declined to comment on whether Fortis Global is in talks with any other local companies at present.

This latest acquisition comes on the heels of two other purchases by Fortis Global in the last five months – that of Hong-Kong based primary healthcare service provider Quality HealthCare in November last year as well as the acquisition of a significant stake in Australia’s largest dentistry network, Dental Corporation, in January this year.

‘We will continue to look for opportunities to further expand our presence in the region,’ said Malvinder Singh, Fortis Global’s executive chairman, in an announcement yesterday.

The Singh family also owns a majority stake in India-based hospital operator Fortis Healthcare, which was embroiled in a corporate tussle last year with Malaysia’s sovereign wealth fund, Khazanah Nasional, over local healthcare provider Parkway. The Indian group eventually rescinded its offer after Khazanah trumped Fortis’ $3.2 billion general offer with a $3.5 billion general offer of its own.