First REIT Review @ 7 November 2023

Basic Profile & Key Statistics

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

Key Indicators

Performance Highlight

For 9M, Gross revenue, NPI and distributable income remain similar YoY. However, DPU has declined due to a larger unitholder base.

Related Parties Shareholding

• REIT Sponsor's Shareholding: Above median by 20% or more
• REIT Manager's Shareholding: Above median by 20% or more
• Directors of REIT Manager's Shareholding: Above median by 20% or more

Lease Profile

• Committed Occupancy: 100%
• Income in SGD/Major Currencies: Below median by 20% or more
• WALE: Above median by 20% or more
• Highest Lease Expiry within 5 Years: Below median by 20% or more; Falls in 2027
• Weighted Average Land Lease Expiry: ± 10% from median

Debt Profile

• Gearing Ratio: ± 10% from median
• Gearing ratio including perps: ± 10% from median
• Cost of Debt: Above median by 20% or more
• Fixed Rate Debt %: Above median by 10% or more
• Unsecured Debt %: Below median by 20% or more
• WADM: Above median by 20% or more
• Highest Debt Maturity within 5 Years: Above median by 20% or more; Falls in 2026
• Interest Coverage Ratio: Above median by 20% or more

Diversification Profile

• Top Geographical Contribution: Below median by 20% or more
• Top Property Contribution: Below median by 10% or more
• Top 5 Properties' Contribution: Below median by 10% or more
• Top Tenant Contribution: Above median by 20% or more
• Top 10 Tenants' Contribution: Above median by 20% or more

Key Financial Metrics

• Property Yield: Above median by 20% or more
• Management Fees over Distribution: Above median by 20% or more; $5.21 distribution for every dollar paid
• Operating Distributable Income on Capital: Above median by 20% or more
• Operating Distributable Income Margin: ± 10% from median
• Operating Distribution Proportion: ± 5% from median

DPU Breakdown

• TTM DPU Breakdown
• 91.1% from Operation
• 8.8% from Management Fees Paid in Units
• 0.1% from Release of Retention/Capital

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
• Slight Uptrend: Interest Coverage Ratio, Operating Distributable Income on Capital 
• Flat: Committed Occupancy
• Downtrend: DPU from Operation, NAV per Unit,  Operating Distributable Income Margin

Relative Valuation

• Dividend Yield: Above +1SD for 1y; Average for 3y & 5y
• P/NAV: Below -1SD for 1y; Average for 3y & 5y

Author's Opinion

Favorable	Less Favorable
High REIT Sponsor's Shareholding	Low Income in SGD/Major Currencies
High REIT Manager's Shareholding	High Cost of Debt
High Directors of REIT Manager's Shareholding	Low Unsecured Debt %
100% Committed Occupancy	Concentrated Debt Maturity
Long WALE	High Top Tenant & Top 10 Tenants' Contributions
No Majority Lease Expiry within 5 Years	Non Competitive Management Fees
High Fixed Rate Debt %	DPU from Operation Downtrend
Long WADM	NAV per Unit Downtrend
High Interest Coverage Ratio	Operating Distributable Income Margin
Low Top Geographical Contribution
Low Top Property & Top 5 Properties' Contributions
High Property Yield
High Operating Distributable Income on Capital
Property Yield Uptrend

The current performance is similar to the previous quarter. For Imperial Aryaduta Hotel & Country Club (IAHCC), there is still no further progress on the divestment and the current lease will expire on 31 Dec 2023. IAHCC contributing approx. 1.7% of FY22 rental income. As for debt, there is no refinancing requirement until May 2026. With a relatively high fixed-rate debt proportion of 85.9%, the finance expense is expected to be stable moving forward. 

For more information, check out:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and details of Singapore REIT

REIT Review - List of previous REIT review posts

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my findings and should not be considered professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.