First REIT Review @ 15 November 2022

Basic Profile & Key Statistics

• Main Sector(s): Healthcare & Hospitality 
• Country(s) with Assets: Indonesia, Singapore & Japan
  
• No. of Properties (exclude development/associate/fund): 32

Key Indicators

Performance Highlight

Gross rental income, NPI and the distributable amount increased yoy mainly due to the contribution from 12 Japan Nursing Homes acquired on 1 March 2022 as well as the recognition of the Financial Reporting Standards (“FRS”) 116 rental straight lining adjustments for FY2022.

Acquisition

FIRST REIT has completed the acquisition of 2 Japan nursing homes on 27 Sep and 29 Sep 2022.

Divestment

The divestment of Siloam Hospitals Surabaya was completed in 29 Sep while IAHCC is being marketed for divestment.

Related Parties Shareholding

• REIT sponsor's shareholding: Above median for more than 20%
• REIT manager's shareholding: Above median for more than 20%
• Directors of REIT manager's shareholding: Above median for more than 20%

Lease Profile

• Occupancy: 100% 
• Income in SGD/Major Currencies: Below median for more than 20%
• WALE: Above median for more than 20%
• Highest lease expiry within 5 years: Below median for more than 20%; Falls in 2025
• Weighted average land lease expiry: Below median for more than 20%

Debt Profile

• Gearing ratio: ± 10% from median
• Gearing ratio including perps: ± 10% from median
• Cost of debt: Above median for more than 20%
• Fixed rate debt %: Below median for more than 20%
• Unsecured debt %: Below median for more than 20%
• WADM: Below median for more than 20%
• Highest debt maturity within 5 years: Above median for more than 20%; Falls in 2023
• Interest coverage ratio: Above median for more than 20%

Diversification Profile

• Top geographical contribution: Below median for more than 20%
• Top property contribution: Below median for more than 10%
• Top 5 properties' contribution: ± 10% from median
• Top tenant contribution: Above median for more than 20%
• Top 10 tenants' contribution: Above median for more than 20%

Key Financial Metrics

• Property yield: Above median for more than 20%
• Management fees over distribution: Above median for more than 20%; $5.13 distribution for every dollar paid 
• Distribution on capital: Above median for more than 20%
• Distribution margin: ± 10% from median

Trends

The 2021 trends for property yield, distribution on capital and distribution margin have been amortized with the straight-line rent which was recognized in 4Q 2021.

• Uptrend: Property Yield
• Flat: Occupancy
• Downtrend: DPU, NAV per Unit, Interest Coverage Ratio, Distribution on Capital, Distribution Margin

Relative Valuation

• Current 52 Weeks Range: 30%
• P/NAV: Below -1SD for 1y; Average for 3y; Below average for 5y
• Dividend Yield: Above +1SD for 1y; Average for 3y; Above average for 5y

Author's Opinion

Favorable	Less Favorable
Diversified Sector	Low Income in SGD/Major Currencies
High REIT Sponsor's Shareholding	Short Weighted Average Land Lease expiry
High REIT Manager's Shareholding	High Perpetual Securities %
High Directors of REIT Manager's Shareholding	High Cost of Debt
100% Occupancy	Low Fixed Rate Debt %
Long WALE	Low Unsecured Debt %
No Major Lease Expiry within 5 Years	Short WADM
High Interest Coverage Ratio	Concentrated Debt Maturity
Low Top Geographical Contribution	High Top Tenant & Top 10 Tenants Contributions
Low Top Property Contribution	Non Competitive Management Fees
High Property Yield	DPU Downtrend
High Distribution on Capital	NAV per Unit Downtrend
Property Yield Uptrend	Interest Coverage Ratio Downtrend
	Distribution on Capital Downtrend
	Distribution Margin Downtrend

Gross revenue and NPI have declined slightly compared to the previous quarter, however, distributable income and DPU maintain the same. At this moment, 25.6% AUM is from the developed markets, mainly through the mean of acquisition and capital recycling. The management targets to meet the target of  >50% of AUM in these markets by 2027, which means, there would be more acquisition and capital recycling ahead.

You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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Singapore REITs Post Telegram Channel - Join to receive posts for Singapore REITs

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REIT Investing Community - Facebook Group where members share and discuss REIT topic

*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage due to the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.