FirstREIT – Phillip

A healthcare property giant in the making

• On a property tour to visit four properties in Jakarta, Indonesia

• The installation of state-of-the-art medical facilities and equipments are way beyond our expectations prior to the visit

• Strong sponsor with visible pipeline is the key to grow exponentially

• No rating given to First REIT

Background

First REIT is Singapore-based REIT with a mandate to invest in income-producing healthcare and healthcare-related assets in Singapore and Asia. The trust was listed in December 2006 and has concluded several transactions over the past one year. To date, it owned five hospitals and a hotel & country club in Indonesia and three nursing homes in Singapore with an estimated asset value of SGD 600 million.

Key takeaways

• Imperial Aryaduta Hotel & Country Club not only attracted business and leisure travelers but also outpatients and its families from Siloam Hospitals Lippo Village due to its close proximity.

• The Siloam Hospitals Group management and medical professionals are well-trained and portrayed proficiency in their field of specialization based on our conversation and observation.

• Multiple firsts in Indonesia’s medical developments have put Siloam Hospitals Group ahead of the curve. The two other private hospitals, namely, Rumah Sakit Pondok Indah Group – with two hospitals in Jakarta – and Grha Kedoya Hospital are considered new players in the healthcare industry with less than three-year in operation.

• Mochtar Riady Comprehensive Cancer Centre is Indonesia’s first private cancer treatment centre with state-of-the-art equipment. It can be a game changer to avert the drain of mid- to upper- income natives from seeking medication in the region.

Investment Merits

• Low gearing ratio (c.15.4%) leaves First REIT with SGD 200 million to acquire new property assets.

• Long lease term to expiry (c.11 years) provides visible and sustainable income which brings along stability and resilience.

• Visible pipeline from sponsor with over 10 hospitals to be completed over the next five years.

Potential risks

• High rental concentration from Indonesia properties which made up 94.4% of rental contribution.