Singapore-listed Healthcare REIT First REIT (SGX:AW9U) has reported a 23.4 percent increase in net property income for the three months ended 31 March 2013 (1Q 2013) to S$17.1 million and 16.5 percent increase in distributable income to S$11.6 million.
|Rental from its facilities in Singapore, such as this nursing home, is expected to increase and further contribute to healthy DPU numbers in the near future.
This comes on the back of higher gross revenue which rose 25.0 percent to S$17.5 million, mainly due to the full quarter contribution from the two new properties acquired in November 2012 – Siloam Hospitals Manado & Hotel Aryaduta Manado, and Siloam Hospitals Makassar.
Excluding the gain on divestment of the Adam Road property which was paid in previous quarters, First REIT achieved a 9.4 percent increase in Distribution per Unit (DPU) for 1Q 2013 to 1.74 cents compared to 1.59 cents in 1Q 2012. Based on annualised DPU of 7.06 cents and closing price of S$1.375 on 22 April 2013, First REIT’s yield remained at an attractive 5.1 percent.
Healthy performance of the REIT is expected to continue as rental income from its properties in Singapore is expected to climb.
“In February this year, as part of our asset enhancement programme, we completed the 5-storey extension to our Lentor Residence in Singapore. Increased rental income from this asset is expected from 2Q 2013,” said Dr Ronnie Tan, Bowsprit Capital's Chief Executive Officer. Bowspirt Capital is the manager for First REIT.
Besides its properties in Singapore, First REIT also remains optimistic on its holdings in neighboring Indonesia given the fact that the country is currently facing a shortage of international-standard hospital beds.
"The growing affluence of the middle-class segment in Indonesia is driving strong demand for quality medical services. Increasingly, younger Indonesian consumers are uncompromising in their search for quality healthcare of international standards. The Siloam Group of Hospitals, the largest and most prominent hospital group in Indonesia, is well-positioned to cater to this middle to upper middle income segment of the healthcare market", the REIT said in a statement.
The First REIT portfolio consists of 12 properties across three countries, namely Indonesia, Singapore and South Korea.
First REIT has indicated in the company's statement that it will continue on its expansion path by searching for more yield accretive, quality healthcare assets in Asia. Its sponsor, Lippo Karawaci, has another 15 hospitals to which First REIT has first right of refusal, providing a steady and strong pipeline of healthcare assets available for acquisition.
Unit of of First REIT are currently trading at S$1.40 on the SGX.