First Reit FY2020 DPU falls 51.7% to 4.15 Singapore cents

Singapore

FIRST Reit on Thursday night reported a distribution per unit (DPU) of 4.15 Singapore cents for FY2020, down 51.7 per cent from its FY2019 DPU of 8.6 cents.

Its manager reported a DPU of 0.84 cent for the Q4 ended Dec 31, 2020. This brings the Reit's DPU for the second half of FY2020 to 1.85 cents, representing a 57 per cent decline from the 4.30 cents in its half-year DPU a year ago.

Distributable income for FY2020 fell 51.2 per cent to S$33.4 million year on year from S$68.5 million as rental and other income for the year slipped 30.9 per cent to S$79.6 million from S$115.3 million in FY2019.

The decline was largely attributable to rental reliefs extended to the Reit's tenants in the months of May and June 2020 as well as a further two months extended in September and October 2020 to tenants in Indonesia, to help alleviate the strains caused by the Covid-19 pandemic.

Correspondingly, net property and other income fell to S$77.5 million in FY2020 compared to S$112.9 million the year before.

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Property operating expenses for the year decreased by 10.4 per cent to S$2.2 million, due to the lower property expenses incurred for properties in Indonesia and property tax rebates received for Singapore property.

Interest income fell to S$1.4 million from S$2.4 million in FY2019, mainly due to the termination of development of new Siloam Hospitals Surabaya on June 29, 2020.

Notably, other expenses for FY2020 increased on year to S$5.7 million compared to just S$1 million in FY2019, mainly due to project expenses incurred.

As at end-2020, the trust's gearing stood at 49 per cent with interest cover at 3.6 times.

Said Victor Tan, chief executive of the Reit's manager: "Our FY 2020 performance is a reflection of the confluence of challenges that First Reit is facing. These include the financial stress facing our largest lessee, PT Lippo Karawaci Tbk, the upcoming refinancing hurdle where 39.8 per cent of our debt is due in less than two months, and the initial term of the master lease agreements in respect of Siloam Hospitals Surabaya, Siloam Hospitals Kebon Jeruk, Siloam Hospitals Lippo Village and Imperial Aryaduta Hotel & Country Club which will expire in December 2021."

First Reit is in the midst of restructuring the master lease agreements relating to 14 hospitals in its portfolio in Indonesia. It is also seeking to raise some S$158.2 million from a proposed rights issue - the amount will be used for partial repayment of the S$400 million secured syndicated loan raised in 2018 and due to mature over the next 18 months.

The trust is only able to obtain refinancing up to a maximum of S$260 million, and the refinancing terms require First Reit to raise the remaining shortfall through equity fundraising.

"First Reit is facing an urgent need to recapitalise. With the proposed plans, First Reit will be able to meet its immediate debt repayment obligations on March 1, 2021 and deleverage its balance sheet, extend the weighted average debt maturity by 11 months and pave the way for further diversification of funding sources as part of the plan to further optimise First Reit's balance sheet," said Mr Tan.

Units of First Reit closed half a Singapore cent or 2 per cent higher at 25 cents on Friday.