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First REIT announces much higher distribution in Q3 2011

I been in and out of First REIT because it pays a good dividends and it is not very volatile. I usually hold some of my money there in this volatile time.

Today First REIT announces their third quarter results. Here are the highlights:

  1. Dividend payout is $0.0192, much higher than the $0.0158 paid out in the past 2 quarters
  2. Gross revenue for Q3 decrease by 0.5% to $13.7 mil compared to forecast mainly due to the absence of the rental income form the Adam Road property as a result of the divestment offset by the maiden contribution from Sarang Hospital acquired in August 2011
  3. Net Debt to Asset is currently 9.8%
  4. The trust has been engaging in preliminary discussions with its sponsor to acquire some of its upcoming properties to which First REIT has a first right of refusal

Overall a good set of results, but things to worry about is that First REIT’s distributable income is higher than Net Profit, due to Management fees paid in units and distribution from other gain.

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rookie boi

Thursday 27th of October 2011

hi Drizzt

thanks for your review.. it is pretty enlightening.

when you mention that the distributable income is higher than net profit, how is that possible? i.e earn $10 but give $12?


Thursday 3rd of November 2011

Hi rookie, sorry for the long delay. a reit can pay more than net income because of the tax concession they enjoy as a reit if they distribute more than 90% of their income. those tax concessions can improve the yield.

in the case of first reit. they can pay more because the managers did not take much management fees in cash but issue units for themselves. indirectly they are paying themselves but to the end user it looks as though they have more money to distribute.


Friday 21st of October 2011

Hi Drizzt,

There is debt $48mil repayable within one year, not too sure their strategy for this repayment or refinancing, just hope that it wont impact the DPU in the coming quarters.


Wednesday 26th of October 2011

gregg, they can roll the debt over. That is not a big sum.

Jared Seah

Friday 21st of October 2011

Hello Drizzt,

Your update on First Reit is a more "accurate" assessment of the situation.

The way the Business Times reporter did the write up on First Reit, for the uninformed, it gave a totally different and "wrong" impression on the improved performance by First Reit. Sigh...,4574,461559,00.html?

Made the classic mistake of comparing apples with oranges - pre-rights offer versus post rights offer.

But then, it's a good example why investors need to do their own numbers crunching; and not simply believe all the headlines reporting in the media.



Wednesday 26th of October 2011

Hi Jared, you give me too much credit. Sometimes my number crunching is as wrong as the Business Times people as well.

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