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First REIT: 2Q 2012 DPU unchanged.

Wednesday, July 25, 2012

First REIT has delivered another quarterly DPU of 1.93c, unchanged from the last quarter. However, the quarterly DPU of 1.93c would not be repeated as it includes the final payment from the gain from selling of its Adam Road property. This is why I have cautioned more than once that we should use a more conservative quarterly DPU estimate of 1.6c when valuing the REIT.


The REIT goes XD on 30 July 2012 and income distribution is payable to unitholders on 29 August 2012.

NAV/unit: 79.5c
Gearing: 15.9%
Interest cover ratio: 11.8x
Occupancy: 100%

In 2H 2012, the REIT could see marginally higher income once a 5 storey annex is completed in its Lentor Residence later this year. It is also expected to take advantage of its low gearing and acquire more properties from its sponsor, Lippo Karawaci. The REIT has ROFR to several properties in Indonesia in various stages of completion.

Lentor Residence

First REIT's current unit price is definitely on the high side. Mr. Market is not known for patience. So, if the REIT should be tardy in its efforts to improve DPU, we could see its unit price declining over time now that the contribution from the sale of its Adam Road property will cease.

See slides presentation: here.

Related post:
First REIT: 1Q 2012 DPU of 1.93c and a higher fair value?

8 comments:

SnOOpy168 said...

Price & yield works in opposite directions. We patiently waits for the right price which delivers the right yield % or perhaps another rights issue.

AK71 said...

Hi SnOOpy168,

Of course, distributable income could increase while price remains stuck. This could bump up distribution yield as well. ;)

I dounbt that First REIT would have another rights issue soon unless it is a mega acquisition. Anyway, no hurry. We can wait. :)

Tan said...

Hi AK

To be honest, a bit dissappointed on the progress of new hospital injection... They have been keep talking since last year.... My guess (hopefully) they will make it in Q3 or Q4 at least to provide some kind of catalyst on the stock performance as next quarter yield is going to drop without the $$$$ from divestment gain....

Gregg

AK71 said...

Hi Gregg,

Plus the fact that the CEO and his wife have earlier this month been divesting their investment in the REIT, I would be feeling a little more than disappointed. I would be a little curious too. ;)

Tan said...

Hi AK,

Yes,sounds fishy.... :).. anyway, i still keep my holding and did not sell out any share for profit taking.

AK71 said...

Hi Gregg,

I partially divested and locked in some gains. On hindsight, as usual, it was too early. In future, I would divest after seeing the CEO and his missus doing the same. ;p

JCK said...

Walau...

You check on the CEOs and their wives activties as well?

Looks over shoulder*

AK71 said...

Hi JCK,

Yes, I am a strange fella... Be afraid, be very afraid... ;p

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