8 things I learned from the 2018 First REIT AGM

First REIT is a Singapore healthcare real estate investment trust (REIT) that invests in healthcare and healthcare-related real estate assets throughout Asia. Managed by Bowspirit Capital Corporation Limited, the REIT has a portfolio of 20 properties across Asia: 16 properties operating under the Siloam Hospitals Group in Indonesia, three nursing homes in Singapore, and a hospital in South Korea. As of 31 December 2017, First REIT has S$1.35 billion in assets under management.

This year, there was a change in leadership. Chairman Albert Saychuan Cheok and chief executive officer Dr Ronnie Tan retired after many years of service and were replaced by Carl Gabriel Florian Stubbe and Victor Tan Kok Mian respectively. I attended First REIT’s annual meeting to evaluate its past year’s performance and its outlook ahead.

Here are eight things I learned from the 2018 First REIT AGM:

1. Gross revenue grew by 3.72% to $110.9 million and net property income grew 3.44% to $109.5 million. Indonesia made up 95.7% of gross revenue, followed by Singapore at 3.5%, and South Korea at 0.8%.

Source: First REIT 2017 annual report

2. Distributable income grew 2.27% to $66.7 million and distribution per unit (DPU) grew 1.2% to 8.57 cents. To keep the momentum going, First REIT acquired two properties last year: Siloam Hospitals Buton & Lippo Plaza Buton on 10 October 2017 at $28.5 million and Siloam Hospitals Yogyakarta on 22 December 2017 at S$27.0 million. With a strong pipeline of properties from its sponsor PT Lippo Karawaci Tbk, which has 33 hospitals operating under Siloam Group and another 40 more on the way, CEO Victor Tan plans to grow by making one to two acquisitions per year.

Source: First REIT 2017 annual report

3. First REIT has a total occupancy rate of 100% with a weighted average lease expiry of 9.5 years as at 31 December 2018. Two tenantsPT Lippo Karawaci Tbk and PT Metropolis Propertindo Utama — made up the bulk of rental income, contributing 82.42% and 12.86% respectively.

4. As of 31 March 2018, First REIT has a total debt of $488.2 million with a gearing ratio of 34.1%. With 49% of their total debt at floating rates, a rise in interest rates could potentially increase their cost of debt.

5. A shareholder wondered if there were any strategy in place to ensure that the growth in DPU would outpace the increase in interest rate. The CEO said that First REIT can maintain its growth in DPU by making yield-accretive acquisitions and managing financing costs. Ideally, he wants to refinance existing loans and have 75-80% of debt at fixed interest rates.

6. A shareholder wanted to know how the new tax regulations on rental of land and/or building in Indonesia, effective from the beginning of this year, would effect First REIT. The CEO replied saying that it had no impact on the First REIT. Due to their triple-net lease master lease agreements, tenants bear all operating costs of maintenance, insurance, and taxes.

7. A shareholder was worried about the health of sponsor Lippo Karawaci after noticing a $6-million increase in First REIT’s accounts receivables. The CEO quelled his concerns saying that since First REIT’s IPO, the sponsor has been paying rent three months in advance. This practice was only discontinued in the last two years as the sponsor has been under financial constraints due to the large number of projects it is involved in. However, the REIT will be working closely with Lippo Karawai to ensure they pay on time and, if needed, provide some flexibility in terms of lease payments. So far, the sponsor hasn’t called to restructure any lease agreements.

8. A shareholder wanted to know more about Sarang hospital in South Korea. Chairman Carl Gabriel Florian Stubbe said that the operator running the hospital has run into cash flow problems and there is an ongoing negotiation on rental payments, but added that South Korea is not a significant part of the REIT’s business. Right now, the board is discussing options on what to do with the property and, in event of a sale, will redeploy the proceeds elsewhere.

Liked our analysis of this AGM? Click here to view a complete list of AGMs we’ve attended »

Kenny Quek

Kenny Quek is a research analyst at The Fifth Person. He graduated from Drexel University in Philadelphia, PA with a major in finance and previously managed a fund in the U.S. before returning to Singapore.


  1. They put up a nice chart of CAGR growth in Gross Revenue, NPI and Distributable Amount, but shy to include the CAGR in DPU chart.

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