First REIT Review @ 25 April 2023

$FIRST REAL ESTATE INV TRUST(AW9U.SI)$

Basic Profile & Key Statistics

• Main Sector(s): Healthcare, Hospitality & Retail

• Country(s) with Assets: Indonesia, Singapore & Japan

• No. of Properties (exclude development/associate/fund): 32

Key Indicators

Performance Highlight

Gross revenue, NPI and distributable income improved YoY mainly due to the Contribution from 14 Japan Nursing Homes which were acquired in 2022. However, DPU has improved slightly as compared to distributable income due to an enlarged 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

• 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: Below median by 10% or more

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 %: Below median by 10% or more

• Unsecured Debt %: Below median by 20% or more

• WADM: ± 10% from median

• Highest Debt Maturity within 5 Years: Above median by 20% or more; Falls in 2026

• Interest Coverage Ratio: Above median by 10% 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; $5.10 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: ± 10% from median

DPU Breakdown

• TTM DPU Breakdown90.8% from Operation9% from Management Fees Paid in Units0.2% from Release of Retention

Trends

• Uptrend: Property Yield

• Flat: Occupancy

• Slight Downtrend: Operating Distributable Income on Capital 

• Downtrend: DPU from Operation, NAV per Unit, Interest Coverage Ratio, Operating Distributable Income Margin

*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.

Relative Valuation

• P/NAV: Average for 1y, 3y & 5y

• Dividend Yield: Average for 1y, 3y & 5y

Author's Opinion

Performance has been impacted by higher financing costs, which has led to a decline in performance as compared to the previous quarter. The cost of debt has increased from 3.7% as of 4Q 2022 to the current rate of 4.7%. There is no debt refinancing requirement until May 2025, albeit the 62.8% fixed rate debt is relatively low as compared to other SREITs. Additionally, there is an outstanding rental arrear of approximately S$2.6 million from PT Metropolis Propertindo Utama and its subsidiaries (MPU), but it is expected to be fully paid within this year based on the payment plan from MPU.

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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 own findings and should not be considered as 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.