First Reit posts 1.4% rise in first quarter DPU

SINGAPORE - Healthcare-based First Real Estate Investment Trust (First Reit) has posted a 1.4 per cent rise in first quarter distribution per unit (DPU) to 2.14 cents.

This was was achieved on the back of the full quarter's rental income contribution from Siloam Hospitals Labuan Bajo, which was acquired in December 2016.

"This is our 11th consecutive quarter of DPU growth since the second quarter of 2014, a testament of our well-tested strategy of acquiring yield-accretive assets," said Dr Ronnie Tan, chief executive officer of the Reit manager.

He added that the Reit will continue to reinforce this strategy this year.

Based on annualised DPU of 8.68 Singapore cents and closing price of S$1.31 as at March 31, the latest distribution translated to a yield of 6.6 per cent.

In the first quarter, First Reit issued 2.7 million new units at S$1.2559 per unit to unitholders who had elected to participate in the distribution reinvestment plan for the fourth quarter of 2016.

Distributable income for the three months ended March 31 was S$16.6 million, up 2.4 per cent.

Gross revenue and net property income (NPI) increased by 2.5 per cent each, to S$27.2 million and S$26.9 million, respectively.

First Reit's gearing ratio stood at 31 per cent, with an interest cover of 5.7 times as at March 31.

To mitigate the impact of interest rate fluctuations, about 90.9 per cent of the trust's borrowings are on a fixed rate basis.

Looking ahead, First Reit remains optimistic about the Indonesian healthcare market.

The country remains its key focal market for growth, especially with the expanding pipeline of over 40 hospitals from its sponsor, PT Lippo Karawaci, for acquisition.

The Reit manager noted that Indonesia's gross domestic product grew 5.02 per cent in 2016, an improvement from 4.88 per cent in 2015.

For 2017, International Monetary Fund is forecasting a growth of 5.1 per cent, driven by government's reforms and infrastructure developments.

"Meanwhile, the healthcare sector remains supported by the ongoing national health insurance scheme, which now allows more affluent Indonesians to supplement coverage under the scheme with private health insurance, lending further weight to private healthcare spending," said the Reit manager.

First Reit units shed half a cent to S$1.345. The results were released after the market close.