First Reit independent directors recommend green-lighting Japan nursing home purchase

Sharanya Pillai

Published Thu, Jan 6, 2022 · 10:53 PM

THE independent directors of the manager of First Reit (real estate investment trust) have recommended that unitholders vote in favour of the acquisition of 12 nursing homes in Japan from OUE Lippo Healthcare and a separate S$30.6 million settlement for cancelled works.

In a bourse filing on Thursday, First Reit's manager issued a notice of an extraordinary general meeting to be held on Jan 28, when it will seek approval for three resolutions related to the Japan expansion and one resolution for the settlement. The settlement is for the terminated development works adjacent to Siloam Hospital Surabaya, Indonesia.

The independent financial advisor (IFA), Stirling Coleman Capital, has advised First Reit's independent directors and the audit and risk committee to recommend that unitholders vote for the four resolutions. This is on the basis that the acquisition and settlement are both on normal commercial terms.

The IFA added that the proposed issue of units as partial consideration for the acquisition, at S$0.305 per unit, is fair and reasonable. In a separate filing on frequently asked questions, First Reit addressed a query on whether this pricing is dilutive - the Reit's units closed at S$0.315 on Thursday.

In response, First Reit said that the issue price is equal to the closing price on Dec 7, the date of the purchase agreement, and at a 9.3 per cent premium to the Reit's 3-month volume-weighted average price of S$0.279. The S$0.305 pricing is also final.

Adrian Chan, lead independent director of the manager's board, echoed the IFA's recommendation.

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Victor Tan, chief executive of the Reit manager, added: "Our hope is to receive the same strong mandate as we did in early 2021, which had allowed us to stabilise First Reit and set firm foundations for our pivot now to growing the trust."