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First REIT: Higher quarterly DPU of 2.00c.

Wednesday, July 16, 2014

First REIT is one of my longest holding investments and currently my second largest investment in an S-REIT.


So, a higher quarterly DPU is going to have a more significant positive impact on passive income received from investments for the full year. The details?

A DPU of 2.00c will be paid on 29 August 2014. XD date is 21 July 2014.

With full income contribution yet to be realised for the recently acquired Siloam Hospital Purwakarta, DPU in the next quarter could see a slight increase, everything else remaining equal.

Gearing is comfortable at 32.9%. Once refinancing of a short term loan facility is completed, First REIT will not have any debt due until 2017. This gives me a peace of mind.


Click to enlarge.



First REIT is still an investment for keeps.

See slides presentation:
First REIT presentation 15 July 2014.

Related post:
A way to a double digit yielding portfolio.

19 comments:

钢铁侠 said...

Hi AK

If we assume no acquisition this year,DPU probably will be flat at 2cents at Q3 and probably 1.9x cents at Q4 ...

In the last call with First Reit, they did hint there will be another acquisition this year,personally I am hoping the target is Balikpapan or Jambi ...

By looking at the track record ,I strongly believe management will definitely do something to maintain the dividend either flat or not lesser than 2cents

Stay tuned ..

Gregg

AK71 said...

Hi Gregg,

Hey! Long time no hear. ;)

I would be quite happy to get 2c DPU every quarter actually. LOL.

Will wait for your updates. Thanks. :)

钢铁侠 said...

Haha ..i visited your blog quite frequently ..just that never post the comment ..

Lol ....

AK71 said...

Hi Gregg,

We can always do with more high quality comments and updates like the ones you contributed. So, looking forward to more regular comments from you. No pressure. ;p

AK71 said...

Bowsprit Capital Corporation, the manager of First REIT said the operations of First REIT’s properties in Manado namely, Siloam Hospitals Manado & Hotel Aryaduta Manado were not affected by the earthquake that rocked the Maluku Islands in eastern Indonesia on 15 November 2014.

Source:
http://www.theedgemarkets.com/en/node/170802

AK71 said...

First REIT, the first healthcare property trust listed in Singapore, will pay $39.2 million to buy a hospital in South Sumatra.

Completed in 2012, Siloam Sriwijaya is a seven-storey hospital in Palembang city operating under the "Siloam Hospitals" brand, which is the largest private healthcare chain in Indonesia, according to a statement from First REIT this morning.

It has a maximum capacity of 347 beds and a total floor area of about 15,335 sq m.

The property is part of the Palembang Square Extension, an integrated development comprising the hospital and a mall.

First REIT will pay $33.2 million in cash for the hospital and fund the remaining $6 million using debt and shares.

Siloam Sriwijaya will be leased to PT MPU under a master lease agreement for 15 years. The pact can be renewed for another 15 years.

The hospital is expected to generate annual rental income of about $3.9 million initially, providing a gross rental yield of 9.95%.

On a pro forma basis, the acquisition would boost distribution per Unit for the nine months ended Sept 30 by 2.33% to 6.15 cents.

The purchase price is 10.6% below the property's valuation provided by Jones Lang LaSalle.

Source:
http://www.theedgemarkets.com/en/node/172816

钢铁侠 said...

Hi AK

Another good deal...stock price is higher now and good for the funding by units....

did you calculated the estimated DPU in coming quarters?

Gregg

钢铁侠 said...

I recalled back the last phone conversation with Victor and he did mention they are looking on one more acquisition this year and finally they made it...

AK71 said...

Hi Gregg,

Well, I haven't been crunching numbers for any of my existing investments in S-REITs for a while but, conservatively, a DPU of 2c per quarter for First REIT is not difficult to imagine at all. Anything more, I will just think of it as a bonus. ;)

First REIT remains a core investment for income for me. A year's worth of income distributions cover about 2 months of routine expenses for me. This is for keeps. :)

钢铁侠 said...

Hi

Should expect higher DPU for Q1 2015 (probably higher than 2.02cents)

Quote from today press release:
In relation to the Consideration Units, PT BPK has agreed to waive its right to be entitled to participate in the distribution of any distributable income accrued by First REIT for the period from the date of issue of the Consideration Units to 31 March 2015

AK71 said...

Hi Gregg,

Thanks for the good news! Looks like it will be a good start to 2015. ;)

AK71 said...

DPU matters more to income investors than the total distributable income. Very pleased with this investment.

FIRST Reit has delivered a record distribution per unit (DPU) of 2.06 Singapore cents for its first quarter ended March 31, 2015, compared to the 1.99 cents it paid a year ago.

Gross revenue rose 10.1 per cent to S$24.7 million, while net property income rose 9.3 per cent


Source:
http://www.businesstimes.com.sg//companies-markets/first-reit-posts-record-q1-dpu-on-new-hospital-contribution

LOL said...

Hello AK,

Been reading up on your REITs posts and thus far it has been really impressive! So I went to First REIT's AR14 to take a look and in the joint Chairman and CEO statement, it states that "95% of our current debt is on a fixed rate basis." However in Note 24E, only around 48% of their debts are on fixed rates.

Can you kindly enlighten me on this matter? Thanks so much!

AK71 said...

Hi LOL,

Thanks for highlighting this. The best people to answer this question would be First REIT's management. You might want to send them an email and see what they have to say. ;)

钢铁侠 said...

I can help to drop an email to first reit IR

AK71 said...

Hi Gregg,

Thanks for the offer. You're the man!

Actually, I do have a general answer to the question but I just don't have an answer specific to First REIT's case.

Debt can be based on fixed rates or floating rates. A company can have 50% debt based on fixed rates and 50% debt based on floating rates but they can say 100% of their debt is on fixed rate if they hedge all their debt that are based on floating rates. :)

LOL said...

Hello both AK and Gregg,

Took the initiative to email First REIT's management before I saw Gregg's reply opps.

Here's the management's reply:

"Thanks for your email.

To clarify, the figures that you see in Note 24E of the Annual Report 2014 is as at 31 December 2014. Hence, you are right that approximately 48% of our total debt is fixed rate.

In early January 2015, S$164.8 million of our term loan has been hedged using interest rate swap to fixed rate. Including our S$26.5 million bridge loan which will be refinanced to a fixed rate loan upon document completion, 95% of our current debt is on a fixed rate basis.

We hope this clarifies any doubts you have.

Thank you."

AK71 said...

Hi LOL,

Ah, I see. So, I guess my general answer hit the nail on the head. ;p

Thanks for sharing this with us. :)

AK71 said...

First Reit has inked an asset-swap deal to sell two of its oldest properties in Indonesia back to its sponsor Lippo Karawaci and then acquire a new hospital that the sponsor plans to build over the next few years.

First Reit will sell an empty plot of land in Surabaya for S$8.2 million and an existing hospital building next to the plot for at least S$27.5 million to Lippo Karawaci, a property developer that is part of Indonesian conglomerate Lippo Group.

Lippo Karawaci intends to use the empty plot for part of an upcoming mixed development in Surabaya that will include a new hospital, mall, hotel, apartments and private school, First Reit said in a press release on Wednesday.

It added that it has agreed to buy this new hospital for S$90 million. In total, First Reit will get at least S$35.7 million from the sales. This sum was more than double the combined S$16.8 million it had paid to acquire the two properties in December 2006 as part of its initial portfolio, it noted.

It also said the sum was 7.5 per cent above the two properties' combined appraised value of S$33.2 million as at Oct 31, 2014. It plans to use the sales proceeds to pay for part of its acquisition of the new hospital, it said, adding that the acquisition will be funded with a mix of debt and cash.

The Reit also said the S$90 million purchase price for the new hospital was at a 12.3 per cent discount off the average of two independent valuations. Timing-wise, the deal will be done in two parts.

First Reit will initially sell off the plot of land so that Lippo Karawaci can redevelop it. After the new hospital has been completed and the necessary hospital permits have been obtained, the Reit will sell the existing old hospital building to Lippo Karawaci and buy up the new hospital in the mixed development.

The Reit said in its statement that the old hospital "serves a large catchment of patients since it was established in 1977". It added: "In recent years, capacity and site constraints as well as demand for better services have led to a need for a more modern and larger facility in Surabaya."

The new hospital is expected to be completed in 2019. The Reit will continue to get rental income from the old hospital until it takes possession of the new one.

Source: http://business.asiaone.com/news/first-reit-agrees-surabaya-asset-swap-lippo#sthash.0UtasTTF.dpuf

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