First Reit to acquire stake in Indonesian hospital and mall for S$70m

BOWSPRIT Capital Corporation Limited, the manager of First Real Estate Investment Trust (Reit), on Thursday said the trust has agreed with unrelated parties to buy PT Nusa Bahana Niaga's stake in Siloam Hospitals Kupang and Lippo Plaza Kupang for S$70 million.

The trust will do this through its indirect wholly-owned subsidiaries, SHKP Investment I Pte Ltd and SHKP Investment II Pte Ltd.

It comes after First Reit entered into conditional share purchase agreements with PT Bumi Sarana Sejahtera and PT Graha Data Nusa, both of which are wholly-owned subsidiaries of PT Metropolis Propertindo Utama.

The offer price represents a discount of 7.19 per cent to S$75.42 million, which is the higher of the two independent valuations.

Ronnie Tan, Bowsprit's CEO, said: "The proposed acquisition presents a great opportunity for the trust to further diversify our portfolio across locations with this maiden asset in city of Kupang, East Nusa Tenggara province in Indonesia. It also aligns with our long term strategic and growth plans of bolstering our distribution per unit accretion and asset size."

The acquisition will expand First Reit's portfolio to 17 properties across Indonesia, Singapore and South Korea, as well as boost its total asset size by 6.84 per cent to S$1.25 billion.

It will be funded through a combination of cash, debt and the issuance of consideration units.

The issue price of the consideration units will be determined based on the higher of S$1.30 and the 10-day volume weighted average price of the units immediately preceding the date of completion of the acquisition.

Concurrent with the completion of the acquisition, First Reit will enter into separate master lease agreements with PT Metropolis Propertindo Utama for the hospital and PT Graha Data Nusa for the mall, for a lease term of 15 years, with an option to renew for a further term of 15 years.

At an expected combined annual initial base rent of approximately S$6.94 million, the properties offer an attractive triple net rental yield of 9.91 per cent, further improving the income stream for the trust, said Bowsprit.

Said Albert Cheok, chairman of the manager: "With its recent announcement on the asset enhancement initiative for Siloam Hospitals Surabaya and the addition of this new acquisition, we expect the trust to continue with its growth trajectory going forward."