The manager of First REIT has reported a distribution per unit (DPU) of 0.6 cents for the 1QFY2024 ended March 31, 3.2% lower y-o-y.
Rental and other income for the quarter fell by 2.7% y-o-y to $26.1 million due to a stronger Singapore dollar (SGD) against the Indonesia rupiah (IDR) and Japanese yen (JPY) but offset by higher rental income in local currency terms from Indonesia and Singapore. Japan recorded stable income for the quarter.
Net property and other income (NPI) fell by 2.1% y-o-y to $25.3 million also due to the stronger SGD.
Distributable income also fell by 2.2% y-o-y to $12.4 million due to a higher cost of debt of 5.0% in addition to the stronger SGD.
As at March 31, First REIT reported full occupancy with a weighted average lease expiry (WALE) of 11.3 years.
Its asset size as at the same period stood at $1.14 billion.
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Gearing as at March 31 stood at 38.8%, 0.1 percentage points higher from Dec 31, 2023. Its interest coverage ratio stood at 4.0 times, down from 4.1 times in the three months before.
As at March 31, First REIT’s net asset value (NAV) stood at 29.48 cents, down from the 30.18 cents as at Dec 31, 2023 mainly due to currency translation. The latest NAV represents a price-to-book ratio (P/B) of 0.88 times.
In its April 24 announcement, the REIT manager revealed that its tenant, PT Metropolis Propertindo Utama, owes the REIT some $5.2 million in outstanding rentals as at March 31. The company’s security deposit is around $2.3 million. The manager says it is “engaging closely” with the company for its repayments.
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Looking ahead, the REIT manager says it is “closely monitoring” and “progressively hedging” its net cashflow from Indonesia and Japan in accordance with its hedging policy.
As at March 31, the REIT manager has hedged over one-third of the currency volatility impact on net cashflow for the full year ending Dec 31. The manager also uses JPY-denominated onshore borrowings to provide a natural hedge for close to 50% of the asset value of its Japanese properties.
“Aged care markets in much of Asia Pacific are at a nascent stage of development, as the responsibility of elderly care potentially shifts from families to institutions amidst declining birthrates. In Japan and in Singapore, preliminary government data showed that in 2023, the number of babies born in Japan fell to a record low of around 760,000 while the total fertility rate in Singapore declined below 1.0 for the first time,” notes the REIT manager in its release.
“In Indonesia, the government is targeting to elevate the middle-class population to 80%, up from the current 20%, in its pursuit of becoming a high-income country by 2045. The rising affluence in Indonesia is expected to translate into a higher demand for quality healthcare in the long-term,” it adds.
Unitholders will receive their DPUs on June 21.
As at 9.18am, units in First REIT are trading flat at 25 cents.
