First REIT property in Singapore, Pacific Healthcare Nursing Home.First REIT property in Singapore, Pacific Healthcare Nursing Home.

OCBC Investment Research has maintained its ‘buy’ rating on Singapore-listed healthcare real estate investment trust, First REIT (SGX:AW9U) and increased its valuation of the security from SGD1.40 to SGD1.50.

First REIT maintains a portfolio of nursing homes in Singapore and South Korea, and a stable of private hospitals across Indonesia managed by Siloam International Hospitals.

“The hospitals are operated by Siloam International Hospitals and are generally well maintained, equipped with modern medical equipment and have high visitor and patient traffic”, said a report by OCBC Investment Research on 27 March, noting that the hospitals it visited are participating in a government-led health insurance programme that is expected to drive growth.

Siloam International Hospitals has projected net operating revenue and EBITDA growth of 49% and 92% in FY2015 respectively.

“Taking into account the robust long-term growth prospects of the Indonesian healthcare market and encouraging signs of Jokowi’s efforts to intensify the implementation of its universal health insurance programme, we raise our terminal growth rate assumption on First REIT from 1% to 1.5%”, said OCBC Investment Research.

Units of First REIT are currently listed on the Singapore Exchange at SGD1.38.

First REIT property in Singapore, Pacific Healthcare Nursing Home.
First REIT property in Singapore, Pacific Healthcare Nursing Home.

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.