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HEALTHCARE real estate investment trust (Reit) First Reit closed its second quarter with a flat performance amid the downturn.
It reported a net property income of $7.41 million yesterday for the quarter ended June 30, down 0.2 per cent from a year ago.
Although gross revenue inched up slightly, property operating expenses almost doubled, due largely to a provision for repair and replacement works at its four properties in Indonesia.
Distributable income in Q2 grew 1.5 per cent year- on-year to $5.28 million. This pushed distribution per unit (DPU) up 0.5 per cent to 1.92 cents, which translates to an annualised 7.66 cents.
Based on First Reit's closing unit price of 70 cents yesterday, the annualised distribution yield would be 10.9 per cent.
Unitholders will receive a distribution of 1.92 cents on Aug 28, for the period April 1 to June 30.
'Despite the recession in Singapore, healthcare demand continues to be stable,' said trust manager Bowsprit Capital Corporation's CEO Ronnie Tan. 'We expect the trust's performance to remain relatively stable and poised for improvement.'
Dr Tan said that First Reit's three hospitals in Indonesia have seen strong growth. He also expects demand for private nursing care to rise as the population ages, and as the government moves to allow Medisave to be used for home palliative care.
First Reit hopes to enhance the value of its assets by upgrading them. Here, it has submitted to the authorities plans for asset enhancement works at Adam Road Hospital, and written approval could come by Q4 of 2009. It is also considering extension works at Lentor Residence, a nursing home.
First Reit is also reviewing the financial attractiveness of various projects, such as the potential purchase of Tech-Link healthcare logistics and distribution centre.
For the first half ended June 30, First Reit turned in a distributable income of $10.47 million - 2 per cent more than a year ago. DPU for the period rose 1.1 per cent to 3.8 cents.
Yesterday, First Reit also issued 438,837 units at 63.28 cents each to Bowsprit, which covers 75 per cent of the manager's performance fee.
It paid another $428,345 in cash for 25 per cent of the performance fee and a base fee.
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