First REIT Maintains A 8.2% Yield



Key Highlights:

  • First REIT (SGX: AW9U)'s 3Q19 remained flat at 2.15 cents

  • The annualised yield and price to book ratio are 8.2% and 1.03 respectively


1. Dividends


Net property income dropped 1.5% to $28.8m. This was mainly due to the lower variable rental component for the Indonesian properties and the higher property operating expenses incurred by Sarang Hospital in South Korea and its Indonesia assets.


The annualised yield is 8.2%.



2. Portfolio


The portfolio leverage is currently at the healthy side of 34.5%. The interest cost is at 4.1%, with 60.2% of the loans are on fixed rates.


It is currently trading at a price to book ratio of 1.03.



3. Growth Catalyst

First REIT is one of few healthcare REITs that are listed on SGX. Its portfolio is concentrated in Indonesia. Moving forward, the REIT will enjoy few growth catalysts:


  1. The healthcare market has been resilient in Asia Pacific, with demand backed by ageing population and other socio-economic factors.

  2. The Indonesia government has cut interest rate and plans to increase fiscal spending to boost the Indonesian economy.

  3. Strong properties pipeline from its sponsor and the REIT manager is also looking for yield accretive healthcare assets from external parties.


While in terms of fundamentals, Parkway Life REIT is the most stable healthcare REIT. However, First REIT offers a more attractive yield with a cheaper valuation.



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