First Reit Q2 DPU plunges 79.5% to 0.44 Singapore cent amid Covid-19 challenges

THE distribution per unit (DPU) of First Reit fell by 79.5 per cent to 0.44 Singapore cent for Q2 ended June 30, compared to 2.15 cents a year ago. 

This brings the Reit's DPU for the first half of the year to 2.3 cents, 46.5 per cent lower than the  4.3 cents for the corresponding period last year.

Income available for distribution for H1 slid 46 per cent to S$18.4 million, while rental and other income for the period fell 33 per cent to S$38.6 million, due primarily to rental relief initiatives that were extended to all tenants to "cushion the strains" caused by the Covid-19 pandemic. The rental relief, extended in the month of May and June 2020 to all of First Reit's tenants in Singapore, Indonesia and South Korea, amounted to a total of S$19.6 million. 

Although bleak, these figures were in line with the Reit manager's profit warning on July 20, which said that it was expecting year-on-year declines of 40 to 50 per cent in its DPU and income available for distribution figures for H1, as well as a decline of 50 to 60 per cent from S$30 million its total return after tax. 

The manager had also announced that further relief measures similar to that announced for the first half of the year may be considered and announced in the second half.

Property operating expenses for the first half of the year fell 15.7 per cent to S$1.1 million due to property tax rebates received for its Singapore property.

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Meanwhile interest income for the period increased 67.8 per cent to S$1.4 million due to the returns from progress payments for the development of new Siloam Hospitals Surabaya, which was served a notice of termination on June 29, 2020. 

The manager says it is in "active discussions" with all stakeholders to reach a settlement on the termination, and will provide an update when there are material developments. 

As at June 30, First Reit says its gearing remained stable at 34.9 per cent; interest cover stood at 3.3 times.

The latest distribution for Q2 is expected to be paid out on Sept 25. The manager said following the distribution payout, the Reit will be able to fulfill its liabilities from its deposited properties as they fall due. 

Mr Victor Tan, chief executive of the Reit's manager, noted that the first half of the year marked a "particularly challenging time" for the company, affecting businesses across all markets including its healthcare and integrated assets comprising malls, hotels and country club. 

Mr Tan said: "Amid the ongoing Covid-19 that has affected patient visits to hospitals in Indonesia, First Reit will continue to work closely with its tenants to weather the headwinds of the pandemic. 

"Its healthcare assets in Indonesia, Singapore and South Korea continue to carry on its business under strict precautionary measures and regulations that put the health and safety of all its staff, tenants and visitors first."

Units in First Reit closed at S$0.665 on Wednesday, down S$0.025 or 3.62 per cent, prior to the results announcement.