First REIT

[kazukirai]

First REIT releases 1H2011 results tomorrow.

http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_A4FCCE8E2D912F59482578CE002A15B1/$file/Date_of_Release_of_Results.pdf?openelement

[kazukirai]

First REIT has released results.

DPU 1.58 cents. (XD 28 Jul 11, Payment 29 Aug 11)
Annualised Yield: 7.8% (based on price $0.82)


Links:

SECOND QUARTER RESULTS * FINANCIAL STATEMENT AND RELATED ANNOUNCEMENT

PRESS RELEASE - FIRST REIT’S 2Q 2011 DISTRIBUTABLE INCOME SURGES 86.5% TO S$9.9 MILLION * FINANCIAL STATEMENT AND RELATED ANNOUNCEMENT

PRESENTATION SLIDES - 2Q 2011 FINANCIAL RESULTS * FINANCIAL STATEMENT AND RELATED ANNOUNCEMENT

[Nick]

Something interesting in the SGX announcement -

PT Lippo Karawaci Tbk has announced plans to develop 25 hospitals in Indonesia in the next five years, and First REIT is currently in preliminary discussions with its sponsor to acquire two of its new properties – Siloam Hospitals Jambi in East Sumatra and Siloam Hospitals Balikpapan in East Kalimantan.

(Vested)

[Drizzt]

will anyone buy first reit after it ex div at this price?

[Gregg]

will anyone buy first reit after it ex div at this price?

Hi Drizzt,

Something to ask for its financial data (still learning how to interpret it).

Net Property Income: $13,103:
Distributable Income $9,895:
Net Cash flows from the operating activities (after) incomes taxes paid): $8,416

How they can pay out the dividend since Net Cash < Dividend.
Which data should we look at if we want to verify is the REIT able to sustain their quarterly distribution.

Any opinion on the latest quarterly report?
Net Property income: Q2 is slightly lower than Q1, $13,103 Vs $14,478, No repayment of borrowings in Q2 and not too sure what is the distribution for the newly acquisition of Sarang Hospital that will take effective in Q3. I would think Q3 DPU probably will still maintain at 1.58.

[Drizzt]

hi Gregg, i feel using operating cf is not a good gauge because distributable income are typically higher than net income. this is due to the addition of certain tax benefits enjoyed as a trust.

i was very puzzled by this as well. it would seem the tax advantage is ensuring it can pay out more. perhaps it is the refund from double taxing.

[Gregg]

hi Gregg, i feel using operating cf is not a good gauge because distributable income are typically higher than net income. this is due to the addition of certain tax benefits enjoyed as a trust.

i was very puzzled by this as well. it would seem the tax advantage is ensuring it can pay out more. perhaps it is the refund from double taxing.

hi Drizzt,

maybe you are correct, probably due to tax advantage, otherwise in term of Mathematically, I dont know how to derive the distributable $$$$.

Nevertheless, i am satisfy with the DPU and its price pop up again today.

Hopefully the expansion of Lentor Residence and potential new hospital injection from parent company Lippo would boost up its price performance.

[Drizzt]

hi Gregg, i feel using operating cf is not a good gauge because distributable income are typically higher than net income. this is due to the addition of certain tax benefits enjoyed as a trust.

i was very puzzled by this as well. it would seem the tax advantage is ensuring it can pay out more. perhaps it is the refund from double taxing.

hi Drizzt,

maybe you are correct, probably due to tax advantage, otherwise in term of Mathematically, I dont know how to derive the distributable $$$$.

Nevertheless, i am satisfy with the DPU and its price pop up again today.

Hopefully the expansion of Lentor Residence and potential new hospital injection from parent company Lippo would boost up its price performance.

I got a reply from investor relations for First REIT. The managers actually leave more of the management fees as units in the company, thus more cash to split for the investors.

saying that, this time round the Manager's Management Fees Settled in units is much higher than previous and probably its taken into account by what was earned through rights issues.

We do hope that they balanced off with higher income next time, because the manager are likely to adjust their own payout back to previous levels

[Gregg]

hi Gregg, i feel using operating cf is not a good gauge because distributable income are typically higher than net income. this is due to the addition of certain tax benefits enjoyed as a trust.

i was very puzzled by this as well. it would seem the tax advantage is ensuring it can pay out more. perhaps it is the refund from double taxing.

hi Drizzt,

maybe you are correct, probably due to tax advantage, otherwise in term of Mathematically, I dont know how to derive the distributable $$$$.

Nevertheless, i am satisfy with the DPU and its price pop up again today.

Hopefully the expansion of Lentor Residence and potential new hospital injection from parent company Lippo would boost up its price performance.

I got a reply from investor relations for First REIT. The managers actually leave more of the management fees as units in the company, thus more cash to split for the investors.

saying that, this time round the Manager's Management Fees Settled in units is much higher than previous and probably its taken into account by what was earned through rights issues.

We do hope that they balanced off with higher income next time, because the manager are likely to adjust their own payout back to previous levels

Hi Drizzt,

Since Reit suppose to distribute out 90% of their income, and we seldom see any repayment of loan in the cash flow statement. Then, my doubt is if they never pay off the debt, they will always got to suffer higher finance expenses (loan interest). If this is the case, the only way to increase DPU is either from reducing the expenses/management fees (unlikely) or through another acquisition which offer higher yield. Then, again, the debt will exist forever????

[Nick]

hi Gregg, i feel using operating cf is not a good gauge because distributable income are typically higher than net income. this is due to the addition of certain tax benefits enjoyed as a trust.

i was very puzzled by this as well. it would seem the tax advantage is ensuring it can pay out more. perhaps it is the refund from double taxing.

hi Drizzt,

maybe you are correct, probably due to tax advantage, otherwise in term of Mathematically, I dont know how to derive the distributable $$$$.

Nevertheless, i am satisfy with the DPU and its price pop up again today.

Hopefully the expansion of Lentor Residence and potential new hospital injection from parent company Lippo would boost up its price performance.

I got a reply from investor relations for First REIT. The managers actually leave more of the management fees as units in the company, thus more cash to split for the investors.

saying that, this time round the Manager's Management Fees Settled in units is much higher than previous and probably its taken into account by what was earned through rights issues.

We do hope that they balanced off with higher income next time, because the manager are likely to adjust their own payout back to previous levels

Hi Drizzt,

Since Reit suppose to distribute out 90% of their income, and we seldom see any repayment of loan in the cash flow statement. Then, my doubt is if they never pay off the debt, they will always got to suffer higher finance expenses (loan interest). If this is the case, the only way to increase DPU is either from reducing the expenses/management fees (unlikely) or through another acquisition which offer higher yield. Then, again, the debt will exist forever????

REITs generally pay out 100% of their distributable income. By law (for local properties), they must pay out at least 90% of their distributable income so there is hardly any room for debt repayment. Instead, REITs will roll-over their debts through refinancing. Generally lenders have no issue with this unless their gearing are excessively high. They will turn to a mixture of equity placements and debt to fund future growth. Some REITs can experience organic growth through development projects which can create massive value in the B/S. I think out of all the business trust and listed REITS, only PST has repaid their loans consistently. Do you like this model ?