Singapore-listed Indonesia-focused Healthcare REIT First REIT (SGX:AW9U) has been upgraded to “Buy” by OCBC Investment Research.

Besides nursing homes, First REIT is largely exposed to Indonesia via its portfolio of private hospitals in the country.

A team from OCBC recently paid a visit to five of First REIT’s properties across Indonesia over a two-day period last week and noted in its report that hospitals under the REIT are generally well maintained and equipped with modern medical equipment.

The report also opined that concern over Indonesia’s easing economic growth and sharp depreciation in the Indonesian currency has impacted stocks such as First REIT which maintains a large exposure to the country. Unit price for First REIT has dipped by 28 per cent since mid-May this year.

However OCBC has noted that the base rental for its properties are denominated in Singapore dollars, hence concerns over first REIT’s exposure to the Indonesian currency may be largely unfounded. For this reason, among others, OCBC is in the opinion that the correction in the price of First REIT has been overdone.

OCBC upgrades the REIT to Buy on valuation grounds with a fair value estimate of S$1.20. Units of First REIT soared on news of the upgrade closing 3.86 per cent higher at S$1.08.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.