FirstREIT – ML

FY07 results

FY07 Results
First REIT has reported FY07 results with DPU of 6.73cps, which is 5.7% higher than IPO forecasts and in line with ML estimates. DPU growth is attributable to organic growth from the Indonesian portfolio together with income contribution from the Singapore assets which were purchased in 2007.

4 MOUs signed for China assets
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.

Positive asset revaluation
First REIT has revalued its underlying portfolio during the period, which has resulted in a valuation uplift of S$92mn vs purchase price. The stock is now trading at a 24% discount to revalued NAV of S$0.95/share. Portfolio size now stands at S$326mn.

Maintain Buy, PO S$0.84
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. We have updated our earnings estimate to reflect the FY07 results.