The unit price of First REIT is up 18% in 10 trading sessions accompanied by a surge in volume taking its price to net asset value (P/NAV) to almost one time. At 32 cents, annualised DPU yield is likely to be 8.1%. Market watchers are looking at First REIT announcing an acquisition soon in either Myanmar, China or Japan.

In January, First REIT restructured its master leases for 14 healthcare assets in Indonesia to be paid in rupiah. The rent will either be the higher of base rent or performance-based rent. Performance-based rent comprises 8% of gross operating revenue. Previously Lippo Karawaci was the master lessee paying rent in Singapore dollars.

First REIT’s new master lease structure takes the pressure off Lippo Karawaci, its former sponsor and master lessee. As a result, Moody’s Investors Service has upgraded Lippo Karawaci’s outlook to positive, from stable on Nov 23. “The rating affirmation with a change in outlook to positive reflects our expectation of an improvement in Lippo Karawaci’s operating cash flow at the holding company level over the next 12–18 months, mainly driven by strong growth in its core marketing sales, the construction completion of its legacy projects and a reduction in rental payments to First REIT,” says Jacintha Poh, a Moody’s senior vice-president.

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