First REIT Q2 2015 Results

First Real Estate Investment Trust (SGX: AW9U) released its second-quarter earnings report yesterday evening. The reporting period was from 1 April 2015 to 30 June 2015. As for today, I am still holding a small position and continuously taking up the DRP. 

DPU - 2.06 cents

Yield - 5.8%  |  6.7% (base on my avg cost price)

NAV - $1.412

Gearing - 32.9%

Current price - $1.42

Here are the highlights:

• Gross revenue rose to $25 million in the latest quarter, up about 8.5% from the same quarter a year ago.
• Consequently, net property income (NPI) for the quarter also rose by 8.3% year on year from $22.7 million to $24.6 million.
• The top-line growth had trickled down to the bottom-line with First REIT’s distribution per unit (DPU) for the reporting quarter coming in at 2.07 cents, a 3.5% increase from the 2 cents seen in the second quarter a year ago.
• The latest valuation for the REIT’s properties stands at S$1.17 billion. First REIT ended the reporting quarter with a net asset value per unit of $1.02, up 5% year over year.

As regards to their debt profile as compared to the end of last year, there wasn't much different. Gearing of 33.1% of last quarter ended December 2014 and Q2 June 2015 of 32.9% at $401.6 million in total.

Other highlights

Lippo Karawaci, the sponsor for First REIT, has 46 hospitals in its development pipeline which can be acquired by First REIT over time.

Dr Ronnie Tan, Chief Executive Officer of First REIT’s Manager, had the following comments on the quarter’s results:

“I am heartened that the Trust has been able to deliver record DPU quarter after quarter, buoyed by our strategic yield-accretive acquisitions of high quality hospitals over the last few years. First REIT has today, attained assets-under-management of S$1.17 billion, which has grown at a CAGR of 20.1% since our listing in 2006.

Despite the increase in assets, with prudent capital management, the Trust has also managed to keep our gearing at a healthy 32.9%, below the current regulatory limit of 35.0%. The regulatory gearing limit will go up to 45% from next year onwards following recent announcement by The Monetary Authority of Singapore. Moving forward, the Trust will continue to grow our assets to maximise returns to Unitholders, as well as adopt an active and prudent approach with our capital structure”

Despite the slowdown economy in Indonesia, First REIT expects healthcare spending to be supported by the universal healthcare scheme introduced by the government.

Summary

From the result I guess it's pretty much business as usual for First REIT. With gearing to increase to 45% following next year, I am looking forward to their acquisition and AEI in the future.