Skip to Content

Religare Health Trust–a good buy?

In an environment where everyone seem to be reaching for higher yield, an India Healthcare business trust looks to be an easy sell.

Its even a better sell if its marketed as 8-9% yielders.

The prospectus can be [view here]

This business trust invest in 11 healthcare related establishment and earned income by leasing them to their Sponsor Fortis.

In the future they would like to invest in Asia and Australia healthcare assets.


Plus points are that the lease terms of healthcare assets are long term 15 years with the view of renewing for another 15 years. Healthcare is a defensive sector that should be cash generating in all times.

Most of the assets are free hold or long term lease hold. So the lifespan is long. A targeted 20-30% leverage is a comfortable range to boost the income but not over commit.


However, there are many downsides. There are currency risks involved. Unlike First REIT, the majority of the earnings are in Rupees. Rupees have not been doing well for some time.

Think it doesn’t matter? Look to Ascendas India Trust. Although, Ascendas did a swell job managing it, the losses due to the strong SGD vs Rupee have limit the income earned.

Another example will be LMIR.

The 8-9% yield looks appealing but there could be some financial engineering involved. The sponsors are forfeiting their share of dividend for the first two years. Thus they can pay out more.

From page 99, the yield is based on DPU due to waiver by sponsor of their entitlement for FY13 (Mar) and FY14 (Mar) + 100% payout ie. inflated by ~2.5% due to this waiver. From FY15 onwards, no more sponsor waiver + 90% payout – that means earnings have to grow to give similar yields.  -valuebuddies

8-9% looks high but if you think about it India 10 year government bond yield is around 8%. Which would be the better buy?


I got really scarred by HPH Trust IPO. As much as I like a hospital operator (vested in First REIT), the currency risk and the spurt of IPO recently seems to indicate this would not be priced cheaply.

For any REIT or Business Trust, the management is very important. MIIF have shown how incompetent management cannot risk manage or take advantage of opportunities. Perhaps the same for GIL.

This company may eventually proved to be a good buy just like HPH Trust at USD 50-60 cents. At IPO not so much.

Price is what you pay, value is what you get. Give time to assess the management. At this moment if you look at 8-9% yield, HPH might be a more worth while target to investigate.

To get started with dividend investing, start by bookmarking my Dividend Stock Tracker which shows the prevailing yields of blue chip dividend stocks, utilities, REITs updated nightly.


This site uses Akismet to reduce spam. Learn how your comment data is processed.

John Chin

Tuesday 16th of October 2012

Hmm... the IPO finally came out today. Taking a look at it, they are estimating dividends at ~9.1% for FY14. Assuming they sustain revenue into FY15, and taking into account -2.5% when sponsor waiver lapses, and payout drops to 90%, the dividend then falls to 6.6% from FY 15 onwards.


Thursday 18th of October 2012

hi John, yes thats right. essentially a 6.6% is lower than a 8% 10 year india govt bond. hmm.

Swee Chye

Monday 15th of October 2012

I suppose STAM vs Babock mgmt, STAM would be seen to perform better under the constraint of the debt and room for manuveur.

Of course if you look at the current lack of direction or movement, then they seems the same in terms of under delivering.

Swee Chye

Sunday 14th of October 2012

I recall Ai-Trust was ipo at $1.18 and shot up to somewherre around $1.80. It was during the bull times where every ipo hits the roof, now it is suffering from currency forex loss, although it is doing quite ok in rupees.

GIL was babock and the babock went belly up and was selling its assets away. But it was the evil scheme of the mgmt to "con" people to buy the ipo, b4 they themselves got out of it by selling their stakes. it was probably saved by ST Asset Mgmt, that came to mgmt it, and they did pretty well, with all the constraints.

I'm not so sure about MIIF, but they are similar to GIL, also from australia, and over promise, under delivered.


Sunday 14th of October 2012

AI Trust is pretty ok operationally, its just the currency fluctuation against our home currency.

Swee Chye, it seems that Australia banks and asset managers are all out to skin us. For readers it is just like what Swee Chye says. So its not high yielding its a good buy.

Actually im vested in GIL, but STAM as an asset manager seem to be under delivering as well.


Saturday 13th of October 2012

Thanks Drizzt. I am looking forward to your comments/analysis on MIIF and GIL.


Sunday 14th of October 2012

hi Vince. MIIF is in the news as they may shift their strategic mandate. We are still uncertain at this point. Knowing the management it seems that they are getting ready to do some form of financial engineering, or to change the investment mandate because they are too incompetent to find good deals.

Frankly as a shareholder, i just hope they don't make a bigger mess.

For GIL, they failed to buy any good yielding assets of note, and have recently look to buying equities. They have not reveal what kind of equities they are or the Internal Rate of Return. But i am not optimistic. These Temasek managers are at this moment not making themselves look good.

Swee Chye

Monday 8th of October 2012

Dear Drizzt,

Have you ever invested in any India stocks or REIT/Trust?

Or have you found a good India stock that more than make up the forex loss, but have good enough capital appreciation + dividends?

Thanks for the good info here, and for taking your time to explain, appreciate it. cheers.


Saturday 13th of October 2012

hi Swee Chye, i didn't. I wanted to get into Ascendas India Trust, but was talked out of it due to the currency risk. but Swee Chye, if u can get it at half the price, the currency risk might be worth it.

This site uses Akismet to reduce spam. Learn how your comment data is processed.