Recent acquisitions help lift First Reit's Q4 DPU by 2.5%

MAINBOARD-LISTED First Real Estate Investment Trust (First Reit) has posted a 2.5 per cent increase to 2.09 Singapore cents in distribution per unit (DPU) for the fourth quarter of 2015, lifted by revenue from recent acquisitions.

Annualised DPU rose 3.1 per cent year on year to 8.3 Singapore cents.

This represents an annualised distribution yield of 6.9 per cent, based on closing price of S$1.20 on Dec 31, 2015.

Total distributable amount for the three months ended Dec 31, 2015, came in 5 per cent higher at S$15.7 million. For the full year, the distributable amount climbed 6.4 per cent to S$61.9 million.

Gross revenue for Q4 2015 rose 7.4 per cent to S$25.7 million from a year ago, largely due to contribution from Siloam Sriwijaya and a maiden contribution from Siloam Hospitals Kupang and Lippo Plaza Kupang.

Siloam Sriwijaya was acquired in December 2014, while Siloam Hospitals Kupang and Lippo Plaza Kupang are its latest properties acquired last December.

Net property income for the quarter went up 7.9 per cent to S$25.4 million.

Property operating expenses for Q4 2015 fell 19.9 per cent to S$301,000 year on year, mainly due to lower expenses incurred for Sarang Hospital partly offset by the land title renewal costs for an Indonesia property.

Income tax for the quarter rose 84.4 per cent to S$16.8 million from a year ago, mainly due to higher provision for deferred tax on fair value gains on revaluation of investment properties as well as higher rental income.

First Reit said its total return after tax for Q4 fell by 46.1 per cent to S$26.1 million year on year, mainly due to the lower fair value gain on revaluation of investment properties, as well as higher provision for deferred tax in Q4 last year.

Excluding fair value gain on revaluation of investment properties net of deferred tax and net gains in fair value of derivative financial instruments, total return after tax for the quarter increased by 19.6 per cent to S$14.4 million compared to Q4 2014 of S$12.0 million. This is mainly due to higher contribution from Indonesia and Singapore properties, as well as contribution from the newly acquired properties and unrealised exchange gain on USD loan.

In its outlook, the Reit said despite the economy facing a slight slowdown, the Indonesian healthcare market stands among a few sectors that have continued to see growth.

"Supply currently falls short of demand, especially in the private healthcare sector and there is room for the expansion and addition of more healthcare facilities. After a round of stimulus measures unveiled in September 2015, the Indonesian government has continued to seek ways to boost spending, investment and business confidence, which include the reduction in fuel prices and cutting of bank lending rates to companies."

First Reit's sponsor, PT Lippo Karawaci Tbk, has continued to expand its healthcare footprint in Indonesia and currently has a strong pipeline of 46 hospitals, thereby presenting First Reit with strong acquisition opportunities.

The increase of the regulatory gearing limit from 35 per cent to 45 per cent proposed by the Monetary Authority of Singapore will give the trust greater operational flexibility and headroom for more acquisitions.

Moving ahead, revenue streams will receive further boost from the completion of the acquisition of Siloam Hospitals Kupang & Lippo Plaza Kupang, as well as its first asset enhancement initiative with Siloam Hospitals Surabaya, said the trust.