SINGAPORE (Apr 18): First REIT yesterday announced that its 1Q18 DPU increased marginally by 0.5% to 2.15 cents compared to 2.14 cents in 1Q17.
During the quarter the REIT’s gross revenue was 5.8% higher at $28.7 million, from $27.2 million a year ago, mainly due to contributions from newly-acquired Siloam Hospitals Buton & Lippo Plaza Buton and Siloam Hospitals Yogyakarta, which were added in October and December 2017, respectively.
In addition, First REIT saw higher rental income from existing properties in Indonesia and Singapore during the quarter.
Correspondingly, net property income for the quarter rose 5.8% to $28.4 million in 1Q18, from $26.9 million a year ago.
See: First REIT posts marginally higher 1Q DPU of 2.15 cents on new acquisitions, higher rents
Following this announcement, CIMB is maintaining its “hold” call on First REIT with a target price of $1.44.
In a Tuesday report, analyst Lock Mun Yee says that the REIT’s new contributions from Siloam Hospitals Buton and Lippo Plaza Buton is expected to collectively add about $5.3 million to its topline, or around 4.7% of Lock’s FY18 revenue forecast.
Moreover, the REIT also indicated that its properties are subject to master leases and the leasees do not pay service and utilities recovery charges. Hence, the REITs earnings are not adversely impacted by Indonesia’s new tax regulations.
See: New tax regulations in Indonesia could impact LMIRT
On the other hand, OCBC is maintaining its “buy” call on First REIT with a fair value estimate of $1.48 as it puts its rating under review.
The REIT’s results came in within the research house’s expectations, with both gross revenue and NPI increasing 5.8% y-o-y.
Finance cost saw a 10.7% y-o-y increase, due mainly to higher loan amounts drawn down for the financing of the latest two acquisitions, as well as the second progress payment for the development of the new Siloam Hospitals Surabaya in 3Q17.
First REIT’s gearing has remained healthy at 34.1% as at Mar 31 2018, though this has edged up slightly from 33.6% as at Dec 31 2017.
As at 3.10pm, units in First REIT are trading 2 cents higher at $1.39 or 1.25 time FY18 book with a dividend yield of 6.58%.
