First REIT - OCBC Investment 2017-07-21: First Acquisition Of The Year

First REIT - OCBC Investment 2017-07-21: First Acquisition Of The Year FIRST REAL ESTATE INV TRUST AW9U.SI

First REIT - First Acquisition Of The Year

  • First REIT announced that it has entered into a conditional sale and purchase agreement with its sponsor, PT Lippo Karawaci Tbk, on the proposed acquisition of an integrated property on Buton Island, Indonesia. This property comprises Siloam Hospitals Buton with ancillary healthcare-related space and a connected retail mall, Lippo Plaza Buton. (See First REIT Announcement dated 2017-07-20 22:00:13)
  • The REIT manager intends to fund the acquisition consideration of ~S$28.5m through a combination of debt and internal cash.
  • We are positive on this accretive announcement, as pro forma FY16 DPU would have risen from 8.47 S-cents to 8.54 S-cents, while the initial rental yield of 10.0% is also slightly higher than that of the last 3 acquisitions. 
  • Notwithstanding this, as this proposed acquisition only comprises ~2.2% of the existing portfolio (valued as of 31 Dec 2016), we prefer to maintain our existing forecast for now and await further potential accretive acquisitions in 2H17. Thus, we maintain our HOLD rating and fair value estimate of S$1.38.




Joseph Ng OCBC Investment | http://www.ocbcresearch.com/ 2017-07-21
OCBC Investment SGX Stock Analyst Report HOLD Maintain HOLD 1.380 Same 1.380



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