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Company Update: First REIT

Company Update: 27 March 2024

Site visit to Siloam Hospitals

  • First REIT aims to become Asia’s premier healthcare trust, with more than 50% of Assets under Management in developed markets by FY27. This strategy involves acquiring new properties in developed markets while strategically divesting non-core or mature assets in Indonesia. Additionally, First REIT is well-positioned to benefit from strong demographic tailwinds, including the growing ageing populations in Singapore and Japan, as well as Indonesia’s expanding population, all of which will drive demand and revenue for its healthcare properties.
  • We visited First REIT owned properties during our trip to Jakarta in March. These properties are being master leased to the Siloam Group.

FY23 financial results

In 2H23, First REIT faced a 5.1% YoY decline in revenue and other income, which was attributed to the depreciation of the Indonesian Rupiah and Japanese Yen against the Singapore Dollar. For FY23, the decrease in rental and other income was lesser due to being partially offset by the Japanese properties that were acquired in March and September 2022. Its net property and other income also fell by 3.0% YoY mainly due to the full-year property expenses incurred for its Japan properties.

There was a slight decline in FY23 dividends due to the higher finance costs as well as the exchange rate differences. The unit base also increased after the issuance of 431.1mn units in March 2022 to partially fund the acquisition of 12 nursing homes in Japan. Hence DPU fell 6.1% YoY from S$0.0264 in FY22 to S$0.0248 in FY23.

Company background

First Real Estate Investment Trust (the Trust) is a Singapore-based healthcare real estate investment trust (REIT). The Trust is focused on investing in healthcare and healthcare-related real-estate assets throughout Asia. The primary objective is to deliver regular and stable distributions to unitholders and to achieve long-term growth in the net asset value per unit. The Trust has a diversified asset portfolio of 32 properties located in Indonesia, Singapore, and Japan, with a total asset value of S$1.14bn and 25.5% of its portfolio in developed markets. Its main properties include nursing homes and hospitals.


  1. Rental incomes from Indonesia and Japan are denominated in Indonesian Rupiah and Japanese Yen respectively. Should the value of these currencies continue to weaken against the Singapore Dollar, the value of First REITs revenue will be negatively impacted by exchange rate factors.
  2. A large portion of First REIT’s income comes from Siloam Hospitals, which could be risky if Siloam runs into financial difficulties. While the parent company of both REIT and hospitals is the same (Lippo Karawaci), there’s still a chance that Siloam’s problems could affect rental payments.
  3. Rising interest rates and interest rates remaining higher for longer could increase First REIT’s borrowing costs, impacting profitability. Inflation impact results in high material costs
  4. The healthcare and REIT sectors in Indonesia are becoming increasingly competitive. New entrants could put pressure on rental rates and occupancy rates.
  5. Changes in government regulations related to healthcare or REITs could affect First REIT’s business model or profitability.

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