Home Capital Broker's Calls

CGS-CIMB keeps faith in First REIT despite rent reliefs taking a toll on earnings

Ng Qi Siang
Ng Qi Siang8/3/2020 04:39 PM GMT+08  • 3 min read
CGS-CIMB keeps faith in First REIT despite rent reliefs taking a toll on earnings
Investors could be tempted, however, by its attractive 8.8% dividend yield,
Font Resizer
Share to WhatsappShare to FacebookShare to LinkedInMore Share
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

First REIT has taken a battering during 1H2020 as Covid-19 ravages property markets. Rent reliefs to beleaguered tenants and uncertainty over master leases have done the trust no favours. Still, CGS-CIMB analysts Lock Mun Yee and Eing Kar Mei have reiterated their “add” call on the counter due to its attractive dividend potential and geographical diversification.

The counter reported a 33% y-o-y decline in 1H2020 gross revenue to $38.6 million, in part due to $19.6 million worth of rent relief offered to all its tenants in Indonesia, Singapore and South Korea for May and June 2020. All property tax rebates received by First REIT will be passed on to its three Singaporean tenants. Management is considering similar rent relief for 2H2020.

As a result, the firm’s distribution income and distribution per unit (DPU) fell 46% and 46.5% y-o-y respectively. Distribution income came in at $18.4 million for 1H2020 while DPU stood at 2.30 cents. This DPU was below expectations for the CGS-CIMB analysts, coming in at just 27.2% of their FY2020 forecast.

×
Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
Subscribe to The Edge Singapore
Get credible investing ideas from our in-depth stock analysis, interviews with key executives, corporate movements coverage and their impact on the market.
© 2022 The Edge Publishing Pte Ltd. All rights reserved.