The manager of First REIT AW9U has reported a distribution per unit (DPU) of 1.24 cents for the 1HFY2023 ended June 30, 6.1% lower than the DPU of 1.32 cents for the same period the year before.
The drop in DPU was attributed to higher financing costs, the impact of currency translation and a higher unit base.
On a q-o-q basis, the DPU for the 2QFY2023 stood unchanged at 0.62 cents.
Distributable income for the 1HFY2023 stood at $25.5 million, up 1.0% y-o-y.
Rental and other income for the 1HFY2023 rose by 0.4% y-o-y to $54.0 million mainly due to a full half-year rental income contribution from 12 Japan nursing homes from the REIT’s sponsor, OUE Healthcare in March 2022. The higher rental and other income was also due to the full half-year rental contribution from the two additional Japan nursing homes that were acquired in September 2022. The growth was offset by the depreciation of the Indonesian rupiah (IDR) and the Japanese yen (JPY) against the Singapore dollar (SGD) in 1HFY2023 compared to the same period the year before.
Meanwhile, net property income (NPI) fell by 0.6% y-o-y to $52.4 million due to the higher property operating expenses from the REIT’s new Japan portfolio.
Its finance costs also rose by 33.3% y-o-y to $11.2 million from higher borrowings and higher interest rates.
Excluding FRS 116 adjustment on rental straight-lining, rental and other income increased 4.7% y-o-y to $46.4 million in the 1HFY2023 from 1HFY2022’s $44.3 million.
Excluding the same adjustment, NPI rose by 3.6% y-o-y to $44.8 million in the 1HFY2023 from 1HFY2022’s $43.2 million.
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As at June 30, the REIT’s portfolio committed occupancy stood at 10% while its weighted average lease expiry (WALE) stood at 12.0 years.
Its gearing ratio as at June 30 stood at 38.7% while its interest coverage ratio stood at 4.1x.
As at June 30, cash and cash equivalents stood at $55.1 million.
“All of the trust’s 32 high-quality healthcare and healthcare-related properties continued to deliver sustainable rental growth in 1HFY2023. Global economic uncertainties have brought about a challenging business environment, but the trust has grown in resilience through the early refinancing of debt and the ongoing diversification of our geographical and tenant mix, in line with First REIT’s 2.0 Growth Strategy,” says Victor Tan, executive director and CEO of the manager.
“Our nursing homes in Japan and Singapore now comprise more than one-quarter of the trust’s assets under management (AUM), and we remain committed towards growing our developed markets portfolio to more than half of the trust’s AUM by FY2027. We also continue to ride on the strong demand for quality healthcare services in Indonesia. With an increasingly diversified portfolio, we expect to remain well-positioned to generate sustainable growth for our unitholders,” he adds.
Unitholders will receive their DPUs on Sept 25.
As at 9.49am, units in First REIT are trading flat at 26 cents.
