First REIT reports 1Q19 net property income slipped amid higher property expenses

Comprehensive Cancer Centre, in Central Jakarta, Indonesia, is part of First REIT's portfolio. Photo used with permission of OUE Lippo Healthcare.Comprehensive Cancer Centre, in Central Jakarta, Indonesia, is part of First REIT's portfolio. Photo used with permission of OUE Lippo Healthcare.

Healthcare-focused First REIT reported on Wednesday its first quarter net property income fell 1.4 percent on-year to S$28.03 million amid higher property expenses.

However, the distribution per unit (DPU) for the quarter ended 31 March remained flat on-year at 2.15 Singapore cents, First REIT said in a filing to SGX after the market close on Wednesday.

The REIT said the DPU marked an “attractive yield” of 8.7 percent, based on the unit’s closing price of S$0.99 as of 29 March.

Property operating expenses surged 114.8 percent on-year in the quarter to S$623,000, mainly on higher expenses for Sarang Hospital and Indonesia properties, the filing said.

“Going forward, the trust will continue to explore opportunities to unlock the value of our existing portfolio through asset enhancement initiatives or strategic divestment of assets for capital gains,” Victor Tan, CEO of Bowsprit, the REIT’s manager, said in the statement.

“With OUE Ltd. and OUE Lippo Healthcare Ltd. on board, we will also look at diversifying our income streams by expanding into
other geographical markets,” Tan said.

In September of last year, OUE and OUE Lippo Healthcare said they would acquire Bowsprit.

The REIT said that it has a strong pipeline of healthcare assets in Indonesia from its sponsors, OUE Lippo Healthcare and PT Lippo Karawaci.

In its outlook, the REIT pointed to “unprecedented growth” in the Asia Pacific healthcare market, with spending estimated to rise to US$2.3 trillion by 2026 from US$1.7 trillion in 2017, amid higher healthcare costs, rising incidence of chronic diseases and an ageing population.

In addition, in Indonesia, the demand for private healthcare is rising as the nationwide adoption of the national health insurance plan grows, First REIT said.

First REIT’s portfolio has 20 properties across Singapore, Indonesia and South Korea.

 

Follow Shenton Wire on Telegram

Get the Shenton Wire morning briefing in your inbox