First REIT announced its second quarter results ended 30 June. distributable income jumped 86.5%. This is nothing surprising as contribution from the Mochtar Riady Comprehensive Cancer Centre and Siloam Hospitals Lippo Cikarang.
The DPU this quarter is 1.58 cents. At current price of 83.5 cents, the distribution yield is 1.9%. Annualized that is 7.56%.
The current NAV per share is 78 cents. This means that this is those rare occasion when First is trading above NAV. Does this indicate that it is overvalued or that finally investors are attributing the stock with the right kind of respect?
Gregg, one of my readers did asked why First REIT is distributing 9.8 mil in dividends when the net income is 8.7 mil. A look up the Statement of Distribution shows that First REIT was able to pay out 1.27 mil more due to adjustment for tax purposes. This isn’t the case in FY2010. Is this going to be an ongoing trend? We would have to ask First REIT regarding this.
The upside for First REIT is good. It has a reasonably strong sponsor with a pipeline of hospitals. In addition, they seem to be very cautious about where they put their money.
Their recent foray into Korean have been cautious too. This acquisition is to test and see whether Korean healthcare properties will be able to value add to their current Singapore and Indonesia portfolio.
What I like is that its NPI is 9% and the land tenure is Freehold. The other terms are similar to their other healthcare assets.
The only downside is that it will be paid in USD.
Continues to look good
First REIT have been one of the stable REITs around that receives little fan fare and almost zero coverage from analysts.
Yet I think I will continue to accumulate it. The decision is straight forward. for the past 2 years price have seldom edge below the 50 day EMA and that would be a place to accumulate. It is also where the current NAV lies.
Since the start of the bull run, it has not gone below the 200day EMA. A persistent week of price action below 200 day EMA would be a signal to lighten up.
Disclosure: Author is vested in First REIT
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