First REIT Full Year 2011 Results Stagnating
First REIT this evening announced their 4th quarter and full year 2011 results. Here are some take-aways
- Net property income is climbing gradually: 13.0 mil > 13.1 > 13.47 > 13.77
- Rental Income climbed in all regions, not just in Indonesia but also for their Singapore and Korea properties
- Larger distribution this quarter similar to that of 3rd quarter, as part of the sale of Adam Road property. Total distribution investors will enjoy is 1.93 cents.
- This years distribution is 7.01 cents. At 77 cents that is 9.01% yield this year.
- Assets continue to increase in fair value.
- Debt to property is 16%
- Net Debt to Asset is only 9%
- Indonesian property values have been rising compare against Singapore properties which are not doing that well.
- Korea Hospital is freehold. Based on rental yield it seems the yield is only 4.9% which is rather low. Freehold is great but I don’t remember the property yield to be this low.
- First REIT have first rights of refusal to Lippo Karawaci’s hospital pipeline. On top of this there is a slew of government measures aimed at making healthcare more affordable to Singaporeans. All these presents opportunity to First REIT
- NAV of 80.5 cents > current share price of 77 cents
Excluding the special dividends from the sale of Adam Road, the distribution did not grow much. I wonder whether that will be a trend. There are rental escalation build into it so we would have expected more.
Then again I may be over analyzing since they sold Adam Road and added a Korea Hospital yet was able to maintain the rental distribution.
Will be expecting much dividends as this is currently my largest holding.
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Related posts:
- Singapore Press Holdings (SPH) Full Year 2011 Results
- First REIT announces much higher distribution in Q3 2011
- Aims Amp Ind REIT, Sabana REIT and Cache Log Trust latest quarter results
- Cache Logistics Trust REIT results inline
- M1 Full Year Results 2010: Paying out more than free cashflow
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Comments
Hi Drizzt
Referring to this point:
Korea Hospital is freehold. Based on rental yield it seems the yield is only 4.9% which is rather low. Freehold is great but I don’t remember the property yield to be this low.
I have emailed them and also asking them what is the progress so far for the injection of Lippo hospital.
Just got their reply this morning.
“The annual rental presented in slide 24 only account for rental receive from 5 August 2011, the commencement date of the lease, to 31 December 2011.
For injection of new hospitals from Lippo, we are still in discussion with Lippo.”
Looks like Sarang Hospital is giving the higher yield than what we expected. A very good investment indeed.
Hi drizzt
The annual rental presented in slide 24 only account for rental receive from 5 August 2011, the commencement date of the lease, to 31 December 2011. ( please refer to PowerPoint slide)
So, in “technical”, it is not consider as annual rental and it should state as Rental Collected in year 2011…lol..
ah i see Gregg, thanks for the fact finding. thats about 1/3 of the year which means that the yield for full year is about 15%??????
Hi Drizzt,
I am also surprise when i got the reply from them as if you are looking at Q4 – Sarang Hopistal itself is already contributing about 65% of total Singapore revenue collected, (501k Vs 769k) .
I have emailed again and asking for Sarang Hospital outlook in Q1 2012, hopefully we can get some kind of data.
Looks like divestment of Adam Road and acquisition of Sarang Hospital is very good move for shareholders like us, we can receive the divestment gain (another 2 more quarters) and alost no reduction in DPU (excluded divestment gain).
Korea properties are high yielding it seems. but there might be some downside. Gregg perhaps u can double confirm with victor that is only 4 months results.
Have been watching First Reits for sometime without committing until last week after this latest results. Need to have regular income in my investments since just retired.
thank you for your your report.
Hi drizzt,
Their reply”
Outlook for Sarang Hospital in Q1 2012 will be similar to Q4 2011 except for difference due to exchange rate.
However, any difference due to exchange rate movement will be mitigated by the lower interest costs as the Sarang Hospital is financed by USD loan.
With regards to your analysis, 05 August 2011 to 31 December 2011 is about 5 months and not about 1/3 of a year.
Therefore, the gross yield for Sarang hospital is lower compared to your analysis .
“
Hi drizz
Good return indeed…. Last time I think is oCBC report saying that they are also looking on other Korea acquisition as well, hopefully it will come real in future …
no problems but do know what you are getting into. look at my past reports and search up on it as an indonesian trust and the lease terms for a better understanding of this trust.
Actually the rental yield of all Singapore property is also about 5% thereabout, it’s only due to the leverage involved that we can see higher yield of 7% to 8%.. 
hi Peroxide, yes! very true! which is why i say not only REITs, if u look at MIIF, HPH or most yielding stocks, their ROA or XIRR over their lifespan is 6-7%!
i added u to facebook =)
Very nice work on your research. Enjoying it very much. No doubt in holding this as the NAV is greater than current price. And I am looking good into First REIT.
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