First REIT reports 9M21 net property income edged down on rental relief to tenants

Singapore two-dollar bills

First REIT reported Tuesday its January-to-September net property and other income slipped 2.2 percent on-year to S$56.46 million, largely on one month and half-month rental relief in July.

The relief was extended to tenants of Hotel Aryaduta Manado and Imperial Aryaduta Hotel and Country Club, and shopping malls Lippo Plaza Buton and Lippo Plaza Kupang, in a move to alleviate the impact of the Covid-19 pandemic, First REIT said.

In addition, property expenses increased 3.2 percent on the absence of property tax rebate for Singapore properties in 2020, the REIT said.

Rental and other income fell 2.0 percent on-year to S$58.13 million for the nine-month period, the REIT said in a filing to SGX.

The distribution per unit (DPU) came in at 1.95 Singapore cents, down 41.1 percent on-year from 3.31 Singapore cents, the filing said. Adjusted for the issuance of 791.06 million rights units in February, DPU would have been 3.83 Singapore cents for the nine-month period, up 15.7 percent on-year, First REIT said.

The distribution payment date is 17 December, the filing said.

First REIT said its performance has been stabilizing after the restructuring of the master lease agreements for 14 Indonesia hospitals in January, and recapitalization efforts in the first quarter of this year.

“The restructured leases have since transitioned into their second year on 1 October 2021, which means rental income will increase by at least 4.5 percent in the coming year, as part of the new agreements.” the REIT said.

Outlook

The REIT was cautiously optimistic on the outlook, noting Indonesia’s latest wave of Covid-19 infections peaked in mid-July and have been declining.

“The manager remains confident on the fundamental secular trends that will drive the country’s private healthcare demand over the longer term. However, the near-term macroeconomic outlook continues to be challenging, with currency and pandemic-related risks,” First REIT said. “While some critical restructuring has been completed to stabilise the trust, the manager has to continue to relook its overall strategy to ensure its resilience, and will work towards improving performance for unitholders.”