First REIT

[Drizzt]

sounds good. thanks.

[Gregg]

sounds good. thanks.

Hi Drizzt,

Price closed at 0.820 today after the XD (not much fluctuating within this week), hope to load more when it come down lower than 0.800. ...

[kichialo]

Gregg if you can, ask him that by paying units they are actually enlarging or diluting the dividends, so essentially it balance off / or the management have already taken their share from the investors already isnt it.

Why don't they carry out shares buy back? Like this they can reward management with these shares and there is also no dilution to anyone.

In that case, might as well pay them in cash directly !

Cash bonus does not necessarily align management's long term interest with unit holders' interest. Shares buyback and rewarding with these shares on the other hand puts management in the same boat with unit holders with the objective of share price appreciation.

[Jared Seah]

Hello kichialo,

You have a very interesting take on share buy-back.

In share buy-back, the no. of outstanding shares will be reduced. Your version is merely moving from left pocket to right pocket. And if FR does that, the "free float" unit-holders are "subsidising" this open-market purchase since its paid out of the collective pool of funds available to all unit-holders; but the no. of shares outstanding is still the same...

Sometimes it's better see things from a different perspective by walking in other's shoes.

If I am a REIT manager, why would I accept a piece of paper instead of cash? I would only do so if I think this piece of paper will go up in value going forward. If I think the piece of paper will drop in value, I will insist to be paid in cash!

Its the same logic if the company you are working for tries to preserve cash by offering you share options instead.

Yes, share options, DRP schemes, etc are all dilutive in nature. But to me, it's a positive sign if they subscribe. It's more aligning the interest with unit-holders. We too have forgone cash for pieces of paper

[Drizzt]

i think its a good thing but Victor did say that at times the manager will still need to eat! so times they still need payout in cash

[Gregg]

i think its a good thing but Victor did say that at times the manager will still need to eat! so times they still need payout in cash

Ya, correct, they still need $$ (salary) to manage REIT with keeiping the high motivation.

I do agreed with Kichialo unit issues as management fees also indicated management are confident in this company (REIT) otherwise we would rather receive cash as payout which safely inside our pocket.

[Gregg]

The DPU includes other gain relating to the distribution of a portion of the total gain on divestment of the Adam Road property of about S$8.7 million. The balance will be distributed to unitholders at the discretion of the manager of First Reit in future periods.

Cumulatively for the nine months, DPU was 5.08 cents down from 5.76 cents a year ago.

Revenue for the quarter rose 79.2 per cent to $13.68 million from $7.63 million, boosting year-to-date revenue up 77.2 per cent year-on-year to $40.08 million from $22.63 million. The increase was mainly due to maiden contributions from three new properties, in addition to other gain relating to the distribution of a portion of the total gain on divestment of the Adam Road property in the first quarter of 2011.

Distributable amount to unitholders for the quarter ended Sept 30 was $12.08 million, representing a 125.7 per cent increase from $5.35 million a year ago.

Consequently, year-to-date revenue was up 100.4 per cent to $31.86 million from $15.9 million.

Looking ahead, First Reit expects the demand for nursing homes and community hospitals to rise on the back of the government's push for improved tertiary care.

[Nick]

Steady set of results. Looking forward to more yield accretive acquisitions in the future.

Vested

[Gregg]

Steady set of results. Looking forward to more yield accretive acquisitions in the future.

Vested

Hi Nick,

(Still learning how to interpret the financial statement, newbie to this)
Those are the question that going to email first REIT, probably you can enlighten me if you have the answer.

1) Captured from the statement, “Other expenses for 3Q 2011 increased to S$1.3 million compared to 3Q 2010 mainly due to unrealised exchange loss on USD loan translated at end of the period. This loan was used to finance the acquisition of Sarang Hospital.”
a. Is this due to weaken USD/SGD in Q3 2011?
b. Then, what is the impact to Q4 since USD is actually strengthen against most of currency in October.

2) There is one Foreign Currency Gain $1.1 Mil, what is this?

3) Captured from the statement “ This includes other gain distribution out of a portion of the total gain on divestment of the Adam Road property of about S$8.7 million. The balance will be distributed to unitholders at the discretion of the Manager of First REIT in future periods”
a. How much is the balance?
b. Q3 2011 distributable Amount, $12078 k vs Q2 2011 $9886k, delta ~$2192K (Assuming Q3 distributable amount w/o divestment same with Q2), is it correct to say that First REIT still keep ~$6.4 mil?

4) The other expenses spike up to $1.3mil vs Q2 $0.39mil, what are the expenses? Excluding this expenses, First REIT should be capable in achieving higher Net Income in this quarter, $9.9mil (Q2:$10.8mil)

5) There is debt $48mil repayable within one year, what is the First REIT strategy for the debt payment or re-financing? Impact on the DPU in future?

[Nick]

Steady set of results. Looking forward to more yield accretive acquisitions in the future.

Vested

Hi Nick,

(Still learning how to interpret the financial statement, newbie to this)
Those are the question that going to email first REIT, probably you can enlighten me if you have the answer.

1) Captured from the statement, “Other expenses for 3Q 2011 increased to S$1.3 million compared to 3Q 2010 mainly due to unrealised exchange loss on USD loan translated at end of the period. This loan was used to finance the acquisition of Sarang Hospital.”
a. Is this due to weaken USD/SGD in Q3 2011?
b. Then, what is the impact to Q4 since USD is actually strengthen against most of currency in October.

2) There is one Foreign Currency Gain $1.1 Mil, what is this?

3) Captured from the statement “ This includes other gain distribution out of a portion of the total gain on divestment of the Adam Road property of about S$8.7 million. The balance will be distributed to unitholders at the discretion of the Manager of First REIT in future periods”
a. How much is the balance?
b. Q3 2011 distributable Amount, $12078 k vs Q2 2011 $9886k, delta ~$2192K (Assuming Q3 distributable amount w/o divestment same with Q2), is it correct to say that First REIT still keep ~$6.4 mil?

4) The other expenses spike up to $1.3mil vs Q2 $0.39mil, what are the expenses? Excluding this expenses, First REIT should be capable in achieving higher Net Income in this quarter, $9.9mil (Q2:$10.8mil)

5) There is debt $48mil repayable within one year, what is the First REIT strategy for the debt payment or re-financing? Impact on the DPU in future?

Hi Gregg,

I will try my best to answer your questions. Perhaps, more experienced REIT investors like Drizzt can chip in...

1) This is a non-cash item and have no bearing on the DPU. It got written back into the distribution statement since it was a non-cash entry in the P&L statement. It doesn't impact the cash-flow.

2) It is related to (1) - non cash expense items are written back into the distribution statement.

3) FR distributed $2.175 million worth of capital gains. I believe they originally booked in $8.7 million so there is around $6.5 mil approx left to be distributed in the coming quarters.

4) Related to (1). No impact to net distributable income.

5) Most likely the debt will be refinanced. Generally REITs do not repay their debt.