FirstREIT – BT

First Reit buys Korean hospital

FIRST Real Estate Investment Trust (Reit) has purchased South Korea’s Sarang Hospital for US$13 million.

Sarang Hospital – said to be one of the largest rehabilitative and nursing facilities in Yeosu – is a six-storey hospital with one basement accommodating 217 beds. Yeosu is the city that will host the World Expo next year.

The hospital boasts a gross floor area of nearly 5,000 square metres on a total freehold land area of 2,142 sq m.

The acquisition, funded entirely by a bank loan, is expected to be completed by next month.

Upon completion, the master lease agreement for Sarang Hospital will start for a 10-year lease term, with an option to renew for a further term of 10 years.

According to First Reit, Sarang Hospital has an initial net property yield in excess of 9 per cent and its annual rental income is expected to climb 2 per cent annually.

After the acquisition, First Reit’s total asset size is expected to grow to S$602.6 million, and its gearing to increase 16.4 per cent before transaction costs.

‘The quality of healthcare in South Korea is among the highest in Asia, supported by top-notch medical professionals, facilities and technology,’ said Ronnie Tan, CEO of Bowsprit Capital Corporation Ltd, manager of First Reit. ‘Operating in such an environment, Sarang Hospital provides a very niche service in rehabilitative care and enjoys a high occupancy rate throughout the year.’

First Reit also saw the opening of its Mochtar Riady Comprehensive Cancer Centre (MRCCC) in Indonesia yesterday.

Located in the heart of Central Jakarta, the 29-storey MRCCC is said to be the first of such facilities in Indonesia that specialises in cancer diagnostics and treatment.

Moving forward, the healthcare real estate investment trust plans to expand its portfolio size to S$1 billion in the next 2-3 years as it seeks out yield-accretive assets throughout the Asia Pacific region.

The company’s shares rose one cent to close at 80.5 Singapore cents yesterday.