First REIT

[Bytesizedinvestments]

First REIT reacted badly this week to news that Lippo group were planning moving the listing of First REIT and Lippo Malls REIT to Indonesia from Singapore.

http://www.straitstimes.com/business/lip...-Indonesia

However, the REIT manager, Bowsprit Capital say they are not aware of any such plans:

http://infopub.sgx.com/FileOpen/First%20...eID=375486

Hi Dosser, FIRST REIT has continued to dive since then and it is close to its 52 week low at $1.175 today. Perhaps due to potential de-listing.

Despite potential headwinds on REIT due to interest rates and potential FX risks from the operator mentioned by Zerobeta, FIRST REIT managed to maintain a QoQ and YoY growth. On top of that, their lease expiry are well spread out, they are also recently recapitalise their debts to hedge against potential interest hike in the near future. It has a current dividend yield of 7% and P/B of 1.15. 

Interestingly, there has been some activities recently. I'm not sure anyone picked it up. Dr Ronnie spent ~S$36,000 repurchasing FIRST REIT shares from the open market on 26 Nov 15 at about S1.18/share. He has spent close to S$1 million of his own cash on share repurchase!!!

Some time back, I did a quick analysis on such corporate actions on my blog. It contains possible reasons of why CEO spent their own money to repurchase. You can refer to it below.

http://www.bytesizedinvestments.com/one-...decisions/ 

With FIRST REIT's fundamentals and Dr Ronnie's action, there could be some indicators that perhaps could instill confidence when times are bad. I thought this should be what value-investors look out for, good companies at fair prices. 

Let me know if I have missed something out. 

(Vested)
____


Financial Freedom can be achieved through prudence and patience capital.

http://www.bytesizedinvestments.com/

[Nick]

Dr Ronnie has been consistently purchasing First REIT units since 2008 to build a stake of over 11 million units. I won't read too much into his timing. But, I do concur that it is a good sign that the management is investing his own personal wealth into the REIT.

(Not Vested)

[krowten]

Sorry, its was meant for First Shipping Lease Trust.

[CityFarmer]

Sorry, its was meant for First Shipping Lease Trust.

No problem. I have moved your post to there.

Regards
Moderator

[Bytesizedinvestments]

In the last quarter, First REIT recently strengthen its growth with acquisition in Kupang, East Nusa Tenggara, Indonesia and secured a deal for the asset enhancement initiative for Siloam Hospitals Surabaya (SHS).

http://firstreit.listedcompany.com/news.html/id/498629
http://firstreit.listedcompany.com/news.html/id/504076

Both deals will see an eventual 9.1% increase in DPU from 6.21 cents to 6.78 cents (Pro-forma based on 9 mths, with 0.37 cents contributed by SHS deal and 0.2 cents contributed by Kupang).

I have also attended the EGM for the SHS deal. It was quite an eye opening to interact with the management and to hear from the horses mouth.

(Vested)
__________
Financial Freedom can be achieved through prudence and patience capital.

http://www.bytesizedinvestments.com

[marandaz]

In the last quarter, First REIT recently strengthen its growth with acquisition in Kupang, East Nusa Tenggara, Indonesia and secured a deal for the asset enhancement initiative for Siloam Hospitals Surabaya (SHS).

http://firstreit.listedcompany.com/news.html/id/498629
http://firstreit.listedcompany.com/news.html/id/504076

Both deals will see an eventual 9.1% increase in DPU from 6.21 cents to 6.78 cents (Pro-forma based on 9 mths, with 0.37 cents contributed by SHS deal and 0.2 cents contributed by Kupang).

I have also attended the EGM for the SHS deal. It was quite an eye opening to interact with the management and to hear from the horses mouth.

(Vested)
__________
Financial Freedom can be achieved through prudence and patience capital.

http://www.bytesizedinvestments.com

Hi,

Thanks for sharing...

During the EGM, did the management give any updates on the rumours of Lippo to delist?

[Bytesizedinvestments]

In the last quarter, First REIT recently strengthen its growth with acquisition in Kupang, East Nusa Tenggara, Indonesia and secured a deal for the asset enhancement initiative for Siloam Hospitals Surabaya (SHS).

http://firstreit.listedcompany.com/news.html/id/498629
http://firstreit.listedcompany.com/news.html/id/504076

Both deals will see an eventual 9.1% increase in DPU from 6.21 cents to 6.78 cents (Pro-forma based on 9 mths, with 0.37 cents contributed by SHS deal and 0.2 cents contributed by Kupang).

I have also attended the EGM for the SHS deal. It was quite an eye opening to interact with the management and to hear from the horses mouth.

(Vested)
__________
Financial Freedom can be achieved through prudence and patience capital.

http://www.bytesizedinvestments.com

Hi,

Thanks for sharing...

During the EGM, did the management give any updates on the rumours of Lippo to delist?

Dear Marandaz,

Yes they did shed light on this matter. 

Management mentioned that in the bid to attract capital, the Indonesia Gov are reducing taxes for REITs. 

However, management pointed out that with the current share price, First REIT is giving a 7% dividend yield while indonesia's risk free interest rates stands around 8-10%. To delist, Lippo has to ensure that the delisting price must be attractive. Meaning First REIT's yield be further depressed if Lippo delist at a price higher then current one. How easy to raise capital if the returns on the REIT is lower then the risk-free interest.These were the facts and questions management pose to us.

You do the math!


(Vested)
__________
Financial Freedom can be achieved through prudence and patience capital.

http://www.bytesizedinvestments.com

[Bytesizedinvestments]

First REITS have recently announced joint acquisition with LMIR for an integrated development in Yogyakarta. The development, Siloam Hospitals Yogyakarta (SHYG) will be purchased at S$40.82 million, representing a 9.69% discount to the higher of two independent valuations.

The SHYG Master Lease will be granted at an initial base rent of S$3.85 million per annum. Net Property income for First REIT (less SHYG) is currently at S$99.3 million.

Refer to website for Announcements: http://firstreit.listedcompany.com/newsr...ZI75.1.pdf

(Vested)
__________
Financial Freedom can be achieved through prudence and patience capital.

http://www.bytesizedinvestments.com

[vingaard]

First Reit's proposed acquisition of Siloam Hospitals Buton and Lippo Plaza Buton is for a consideration of $28.5 million. The base rent is $1.6 million per annum. The circular stated that the yield of the property is 9.97%. If I take $1.6 million as a percentage of $28.5 million, that works out to 5.6%. Am I missing something here?

[wonghw12]

First Reit's proposed acquisition of Siloam Hospitals Buton and Lippo Plaza Buton is for a consideration of $28.5 million. The base lead is $1.6 million per annum. The circular stated that the yield of the property is 9.97%. If I take $1.6 million as a percentage of $28.5 million, that works out to 5.6%. Am I missing something here?

The $1.6m p.a. rent is for Siloam Hospitals Buton. Lippo Plaza Buton rent is $1.242m p.a. The total will yield 9.97%