First Reit H2 DPU drops 29.2% to S$0.0131 after rights units issuance

Megan Cheah

Published Fri, Feb 11, 2022 · 12:26 AM

FIRST Real Estate Investment Trust's (First Reit) distribution per unit (DPU) dropped to S$0.0131, down 29.2 per cent year on year from S$0.0185, in the second half ended Dec 31, 2021, its manager announced on Thursday (Feb 10).

This was despite the healthcare Reit's H2 distributable income growing 41.5 per cent to S$21.2 million, from S$15 million a year ago.

The lower DPU was mainly due to an issuance of around 791.1 million rights units on Feb 24, 2021, which are entitled to participate in the full-year's distribution, its manager said.

The enlarged unit base also brought the full-year DPU down 37.1 per cent to S$0.0261, from S$0.0415 in the year-ago period.

If the new rights units issued in February 2021 are excluded, the adjusted DPU would have been S$0.0256 for H2 FY2021 and S$0.0512 for the full FY2021, both increases from the previous year.

The manager also noted that the H2 DPU of S$0.0131 includes the third quarter amount of S$0.0065 that was paid on Dec 17, 2021.

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Unitholders can thus expect to receive a DPU of S$0.0066 for the period Oct 1 to Dec 31, 2021 on Mar 29, 2022 after the Feb 21 book closure date.

First Reit's H2 top line climbed 54.6 per cent to S$63.4 million from S$41 million a year ago.

This increase in revenue was matched by H2 net property and other income increasing 56.8 per cent to S$62.6 million, from S$39.9 million a year ago.

Similarly, revenue, and net property and other income for the full year also increased, with the top line up 28.5 per cent year on year to S$102.3 million from S$79.6 million, and net property and other income up 29.4 per cent to S$100.2 million.

Its distributable income for the full year also went up 26.1 per cent year on year to S$42.1 million from S$33.4 million

The manager attributed the top line's jump to the Reit's accounting treatment, where rental income with fixed annual escalation will be recognised on a straight-line basis over the contractual lease term.

This allowed the rental income of 14 Indonesia hospitals, under the restructured master lease agreements with a minimum 4.5 per cent annual escalation, to be recognised on a straight-line basis for the entire lease term.

First Reit's portfolio is 100 per cent master-leased, its manager said.

In its outlook, the manager said that the Reit's assets will continue to operate under strict precautionary measures due to the spread of Omicron in Indonesia, as its hospitals under Siloam International Hospitals are contributing to the country's fight against the pandemic.

In addition, the Reit's 24.2 billion yen (S$280.5 million) proposed acquisition of 12 Japanese nursing homes is DPU-accretive with an expected 0.8 per cent increase in DPU to 1.31 Singapore cents from 1.30 cents on a H1 FY2021 pro forma basis, said Victor Tan, chief executive officer of the Reit's manager.

First Reit will continue to seek accretive prospects from third parties within and outside Asia, as well as its network of healthcare assets from its sponsor group, which includes OUE Limited and OUE Lippo Healthcare, its manager said.

Units of First Reit closed at S$0.315, up 1.6 per cent or S$0.005, before the results were announced.

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