First Real Estate Investment Trust (First REIT) announces their second quarter results. Presentation slides [here] and results [here]
Results are as expected with almost no surprises:
- Revenue increase due to contribution from Sarang Hospital in Korea
- First REIT touts their growth structure that increases in tandem with inflation. The Indonesia hospitals have a base escalation ( 2 times % increase of Singapore CPI, capped at 2%) + variable escalation (which is in Indonesia dollar currently weakening vs SGD). For Singapore and Korea units they have a fixed based rental but annual increment of 2%. This means that rampant 5% inflation, they are not growing as fast
- Net Property Income to date have grown 6% versus the same period last year
- This quarter’s distribution and last 3 quarter’s distribution was higher due to the distribution coming out of a portion of the total gains on divestment of the Adam Road property in 1Q 2011. You can find this portion under other income
- NAV stands at $0.79 which means First REIT is trading above its NAV
Current yield looks very ordinary and trading above NAV. Unless we see some catalyst I wouldn’t recommend getting invested in this.
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