SINGAPORE - First Real Estate Investment Trust (First Reit) has, through a wholly-owned unit, agreed to acquire an integrated property on Buton Island, Indonesia, for about S$28.5 million from Andromeda Sakti.
The integrated property comprises Siloam Hospitals Buton with ancillary healthcare-related space and a connected retail mall, Lippo Plaza Buton.
The purchase consideration is at a 2.4 per cent discount to the higher of two independent valuations of the property, at S$29.2 million, said Bowsprit Capital Corporation, the manager of First Reit, in a filing to the Singapore Exchange on July 20.
Andromeda Sakti is an indirect wholly-owned subsidiary of Lippo Karawaci, the sponsor of First Reit.
The manager added it intends to finance the acquisition by a combination of a drawdown from First Reit's committed debt facilities and internal cash.
This is the trust's second acquisition comprising a hospital and a connecting retail mall following the acquisition of the Kupang Property in 2015.
"This property presents a great opportunity for the trust to invest in a hospital that is attractive, high quality and integrated with a complementary mall in a strategic location in the city of Bau Bau on Buton Island, which is a port city that serves as a liaison between West and East of Indonesia, as well as the needs of people in South-east Sulawesi," said Mr Victor Tan, executive director and acting chief executive of Bowsprit.
"It would also diversify our portfolio and mark the extension of First Reit's portfolio in the island of Sulawesi, adding to two existing Sulawesi properties, namely the Manado Property and Siloam Hospitals Makassar."
Mr Tan added that the acquisition, when completed, will bring First Reit's portfolio from 18 to 19 properties, and its asset size will expand by 2.4 per cent to S$1.3 billion from S$1.27 billion.
"The larger asset base will not only raise the profile of First Reit among global investors, but it is also expected to enhance the trust's overall capital management flexibility to pursue future acquisitions."
The proposed acquisition is subject to, among others, the approval of First Reit's unitholders at an extraordinary general meeting.
Units of First Reit closed flat at $1.345, before the announcement was made.