First REIT (FREIT) reported 3Q12 results which were in line with our expectations. Gross revenue increased 3.7% YoY to S$14.2m due to higher contribution from all its properties. Distributable amount to unitholders and DPU slipped 12.1% and 12.5%YoY to S$10.6m and 1.68 S cents respectively, but this was due to the absence of a special distribution which occurred in 3Q11. Looking ahead, FREIT continues to see ample growth opportunities in Indonesia’s underserved healthcare market. The group would seek approval from its unitholders during an EGM for its proposed acquisition of two Indonesian properties from its sponsor Lippo Karawaci. While we like FREIT for its visible and defensive income streams which would provide stability to unitholders, we believe that this has been factored in its share price, as reflected by its FY13F P/B ratio of 1.3x. Maintain HOLD with an unchanged fair value estimate of S$0.98.
3Q12 results were within expectations
First REIT (FREIT) reported 3Q12 results which were in line with our expectations. Gross revenue increased 3.7% YoY to S$14.2m, driven by a full quarter of contribution from its Sarang Hospital (acquired in Aug 2011) and higher rental income from its other assets. Distributable amount to unitholders and DPU slipped 12.1% and 12.5%YoY to S$10.6m and 1.68 S cents, respectively. This is unsurprising given the absence of a special distribution of S$2.2m (S$0.34 per unit) in 3Q11 which arose from a gain from the sale of the Adam Road property (four equal tranches paid from 3Q11 to 2Q12). For 9M12, gross revenue climbed 5.4% to S$42.2m and formed 71.4% of our full-year forecast which includes our assumptions on the contribution from its proposed new acquisitions. Distributable amount to unitholders rose 9.6% to S$34.9m, or 74.8% of our FY12 estimate.
Abundant opportunities in Indonesia’s healthcare market
FREIT continues to see ample growth opportunities in Indonesia’s underserved healthcare market. Demand for higher quality private healthcare services would likely gain traction moving forward, underpinned by a growing population, rising affluence and urbanisation rate. Hence we expect Indonesia to remain as FREIT’s core focus, especially since it has a right-of-first-refusal on its sponsor Lippo Karawaci’s (Lippo) Indonesian healthcare assets.
Maintain our HOLD rating
FREIT has lodged its Circular regarding its recent proposal to acquire two Indonesian properties from Lippo. An EGM will be held on 9 Nov to obtain unitholders’ approval. While we like FREIT for its visible and defensive income streams which would provide stability to unitholders, we believe that this has been factored in its share price, as reflected by its FY13F P/B ratio of 1.3x. Although this represents a 7.2% discount to its closest comparable peer Parkway Life REIT (1.4x), it is still a 20.8% premium to the S-REIT universe average of 1.1x. Maintain HOLD with an unchanged fair value estimate of S$0.98.
First REIT (FREIT) reported 3Q12 results which were in line with our expectations. Gross revenue increased 3.7% YoY to S$14.2m, driven by a full quarter of contribution from its Sarang Hospital (acquired in Aug 2011) and higher rental income from its other assets. Distributable amount to unitholders and DPU slipped 12.1% and 12.5%YoY to S$10.6m and 1.68 S cents, respectively. This is unsurprising given the absence of a special distribution of S$2.2m (S$0.34 per unit) in 3Q11 which arose from a gain from the sale of the Adam Road property (four equal tranches paid from 3Q11 to 2Q12). For 9M12, gross revenue climbed 5.4% to S$42.2m and formed 71.4% of our full-year forecast which includes our assumptions on the contribution from its proposed new acquisitions. Distributable amount to unitholders rose 9.6% to S$34.9m, or 74.8% of our FY12 estimate.
Abundant opportunities in Indonesia’s healthcare market
FREIT continues to see ample growth opportunities in Indonesia’s underserved healthcare market. Demand for higher quality private healthcare services would likely gain traction moving forward, underpinned by a growing population, rising affluence and urbanisation rate. Hence we expect Indonesia to remain as FREIT’s core focus, especially since it has a right-of-first-refusal on its sponsor Lippo Karawaci’s (Lippo) Indonesian healthcare assets.
Maintain our HOLD rating
FREIT has lodged its Circular regarding its recent proposal to acquire two Indonesian properties from Lippo. An EGM will be held on 9 Nov to obtain unitholders’ approval. While we like FREIT for its visible and defensive income streams which would provide stability to unitholders, we believe that this has been factored in its share price, as reflected by its FY13F P/B ratio of 1.3x. Although this represents a 7.2% discount to its closest comparable peer Parkway Life REIT (1.4x), it is still a 20.8% premium to the S-REIT universe average of 1.1x. Maintain HOLD with an unchanged fair value estimate of S$0.98.
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