First REIT continues to announce a stable set of results for the first quarter.[Results here] A distribution of $0.0776 works up to a yield of 2.09% for the first quarter and an annualized yield of 8.4% at the current share price of $0.92.
A note to investors is that for this quarter and the last 2 quarters, they have been distributing a one time gain from the sale of their Adam road healthcare building. Thus the dividend yield is higher. Without those the quarter dividend yield would have been $0.0158, 1.7% and annualized $0.068, 7.4%.
That is still a pretty good yield although the share price have ran up 20%.
Net Debt to Asset remain at 10% making this one of the lowest geared. They can pay off their debts with 2.2 years of their profits if undistributed.
Net Asset Value per share is $0.799 versus a current share price of $0.92. The price to asset value have gotten ahead of itself and does not look that cheap now.
I am speculating a rights issue or a share placement soon. First REIT wants to add 15 hospitals in the next few years and with the share price appreciation, they would have a lower hurdle rate in terms of finding yield accretive assets.
At $0.77, they would have to find assets yielding greater than 8.8% in order to boost the dividend per share. Now they just have to find assets yielding greater than 7.4%
At a low share price, due to the hurdle rate to find yield accretive asset, it is likely that current share holders would be diluted and appears unfair to current investors.
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