First REIT: Acquisitions in Manado and Makasar. (Amended)

First REIT is acquiring two properties from its sponsor, PT Lippo Karawaci Tbk.

The two are Siloam Hospitals Manado & Hotel Aryaduta Manado at S$83.6 million, and Siloam Hospitals Makassar at S$59.3 million. The prices are at a discount of 10.78% and 9.81% to valuations, respectively.

The purchases will be funded through debt and a private placement.

Some pro forma numbers:

Total asset size:
S$782.2m or an increase of 26.4%.

NAV/unit: 84c.

Annual DPU: 7.45c. 6.77c.

Read press release: here.

What really interests me is the DPU here. An annual value of 7.45c 6.77c will approximate 1.86c 1.692c per quarter.

Regular readers will remember that I said a safer way to value First REIT was to use a quarterly DPU of 1.6c as it would remove the special distributions resulting from the sale of the REIT's Adam Road property. This is especially so if the management should be tardy in moving to improve the REIT's income.

Well, the special distributions have run out but the proposed acquisitions will take in S$14.1m in annual net rental income which is equivalent to a quarter of the REIT's annual revenue from its current portfolio. Therefore, the proposed acquisitions will keep the REIT's DPU more or less unchanged which would, in turn, lend support to its much higher unit price today. Now, I wonder if this is enough to lend support to its much higher unit price today.

At last session's closing price of $1.03 a unit, we will be looking at a pro forma distribution yield of 7.233% 6.573%. This is probably still attractive enough for many in the current low interest rate environment.

Related post:
First REIT: 2Q 2012 DPU unchanged.

Tea with AK71: Breakfast and lunch for 96c.

What did I have for breakfast and lunch today?

Breafast: Oatmeal! My favourite!

A 1 kg pack of rolled oats costs less than S$5.00 and is enough for 20 servings or more. So, each serving costs 30c to prepare, perhaps. I would cook enough for 3 servings each time. Keep them in the fridge and bring 1 serving to work daily for the next 3 days.

Lunch: Cup noodles!

I used to eat instant noodles frequently but I have cut down on these a lot in the last few years. I bought some two nights ago when I went grocery shopping at NTUC Fairprice with my mother after taking a walk to the neighbourhood park together. Only $5.95 for 9 cups! That is 66c a cup! Cheap!

*Hot water courtesy of the office pantry.

Total cost of breakfast and lunch today: 96c.

Related post:
Inflation hits fried bee hoon.