First Reit Q1 DPU Increases 15.6% To 1.85 Cents

Source : The Business Times, April 23, 2008

HIGHER rents and contributions from new properties led healthcare-focused First Reit to a 15.8 per cent gain in first-quarter distributable income to $5.1 million.

The performance lifted distribution per unit 15.6 per cent to 1.85 cents, from 1.60 cents in Q1 last year. On an annualised basis, this translates to 7.5 cents or a distribution yield of 10.7 per cent, based on last Friday's closing price of 70 cents a share.

Ronnie Tan, CEO of the Reit's manager Bowsprit Capital Corp, said that the results reflect the structure of the Reit, which focuses on long-term stability.

'Our properties are leased to master lessees for relatively long tenures of 10 and 15 years, with provisions for favourable yearly rental increases,' he said. 'This minimises the risk associated with short-term leases and multiple tenants. . .

'In addition, the base rent for our Indonesian properties is pegged to a relatively stable Singapore dollar, which helps reduce forex volatility.'

First Reit has eight properties in its portfolio, including three Siloam Hospitals and the Imperial Aryaduta Hotel and Country Club in Indonesia. Between Q2 and Q3 last year, the trust acquired Adam Road Hospital, The Lentor Residence and two nursing homes in Singapore.

For the three months ended March, net property income rose 24 per cent to $7.4 million. Management fees rose 27.2 per cent to $701,000. The trust also incurred $490,000 in finance costs for external borrowings used to fund the Singapore acquisitions.

With a debt-to-property valuation ratio of 15.6 per cent, Dr Tan said that there is ample space to support further growth in assets. The Reit is aiming for a portfolio size of $400 million by the end of this year, from $326 million now. It is eyeing opportunities in China, Indonesia and Malaysia.

Amid expectations of a global economic downturn, Bowsprit Capital remains optimistic that First Reit will continue to perform 'because of its stable revenues which are based on long-term rental leases'.

Shares of First Reit went up half a cent yesterday to close at 70.5 cents.