The manager of First REIT announced that it will be divesting Siloam Hospitals Surabaya for a consideration of IDR430.0 billion ($40.9 million) to PT Siloam International Hospitals and PT Megapratama Karya Bersama.

PT Megapratama Karya Bersama is a company in which Siloam International Hospitals directly holds a 99.99% interest and PT Lippo Karawaci (LPKR) indirectly holds a 0.01% interest.

This divestment comes on the back of the manager in December last year announcing its entry into two settlement agreements with PT Saputra Karya, an indirect wholly-owned subsidiary of LPKR, in connection with a proposed settlement in respect of the terminated development works adjacent to Siloam Hospitals Surabaya.

The proposed divestment provides First REIT with the opportunity to optimise its capital structure and is in alignment with the “First REIT 2.0 Growth Strategy” to reshape its portfolio for capital efficient growth.

Siloam Hospitals Surabaya was part of the REIT’s initial portfolio and was acquired at a purchase price of $16.8 million on Dec 11, 2006. This divestment hence represents a 143.2% capital gain.

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Following the Proposed Divestment, the weighted average age of property computed on a GFA basis for the portfolio of First REIT will improve from 16.2 years to 15.7 years as at 31 December 2021 and on a pro forma basis, including the Japan Nursing Homes

The net proceeds from the divestment may be used to repay debt, finance any capital expenditure and asset enhancement works and/or general corporate and working requirements, and to distribute as capital gains.

Units in First REIT opened at 28 cents on May 19.

First REIT divests Siloam Hospitals Surabaya for $40.9 mil

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First REIT divests Siloam Hospitals Surabaya for $40.9 mil

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