First Real Estate Investment Trust (Reit), a Singapore-listed healthcare Reit, has agreed to buy a hospital property in West Java, Indonesia, for $31 million.
It will buy Siloam Hospitals Purwakarta from PT Purimas Elok Asri, bringing its portfolio to 15 properties worth $1.09 billion.
The price represents a discount of 17.3 per cent from the higher of two independent valuations obtained for the property, said First Reit's manager Bowsprit Capital Corporation on Thursday.
First Reit will pay for the acquisition partly through debt and partly by issuing new units. It will pay $26.5 million in cash and the remaining $4.5 million in new units.
"This investment offers a unique opportunity for First Reit to invest in a growing niche market in Purwakarta, West Java, which has a population of almost 1 million," said Mr Albert Cheok, Bowsprit's chairman.
Bowsprit chief executive officer Ronnie Tan noted that Purwakarta has "a growing manufacturing, trading and agricultural market and a real gross domestic product compound annual growth rate of 5.8 per cent from 2008 to 2012".
Siloam Hospitals Purwakarta is "well-positioned to cater to the burgeoning middle income groups in the residential and industrial areas of the city", Dr Tan said.
The property will also provide a base rent of $3.4 million a year and a current rental yield of about 11 per cent, higher than First Reit's existing properties, said Bowsprit.
Siloam Hospitals Purwakarta comprises two hospital buildings of three and five storeys, completed in 2005 and 2008 respectively. The property has a total gross floor area of about 8,254 square metres and a maximum capacity of 203 beds.