Centurion Club: REITs

First REIT is another of the listed entities that made a clean sweep of its industry sector of REITs at this year’s Centurion Club. The REIT focuses on healthcare assets in the region. The REIT’s manager is 60% directly held by OUE and 40% by OUE Healthcare (OUEH), who together are its sponsors and have a combined stake of 45.17% as at Dec 31, 2024. 

As indicated in the company’s FY2024 annual report, as at Dec 31, 2024, it owns a portfolio of 32 properties across Asia, with a total asset value of $1.12 billion. These include 15 properties in Indonesia comprising 11 hospitals, two integrated hospitals & malls, one integrated hospital & hotel, and one hotel & country club; three nursing homes in Singapore; and 14 nursing homes in Japan. 

Its healthcare properties in Indonesia are operated by PT Siloam International Hospitals, while healthcare properties in Singapore and Japan are operated by well-established third-party operators. First REIT has a right of first refusal (ROFR) from OUEH and opportunities to tap into its growing healthcare network across Pan-Asia. In addition, First REIT also has a ROFR to a pipeline of hospitals from Lippo Karawaci, a shareholder of Siloam.

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In its FY2024 annual report, First REIT says its ability to generate stable income from its geographically diversified portfolio is a testament to its sustainable and strong leasing performance. In FY2024, First REIT continued to capitalise on underlying organic growth from its portfolio of 32 strategically located healthcare and healthcare-related assets. 

For First REIT’s Indonesian assets, 10 hospitals registered a built-in increment of rental income of 4.5% in local currency terms, while Siloam Hospitals Kebon Jeruk, Siloam Hospitals Purwakarta and Siloam Sriwijaya achieved a performance-based rent that is 8.0% of each hospital’s gross operating revenue in local currency terms in the preceding financial year.

In Singapore, First REIT’s three nursing homes registered a rental growth of 2.0% in Singapore-dollar terms while rental income from the 14 nursing homes located in Japan remained stable in local currency terms. As at Dec 31, 2024, First REIT’s properties achieved 100% committed occupancy with a weighted-average lease expiry of 10.6 years, more than four-fifths of its portfolio have a lease expiry of over five years. 

In FY2024, First REIT’s distributable amount declined by 4.1% y-o-y to $49.3 million in FY2024 and full year distribution per unit of 2.36 cents was 4.8% lower from FY2023.
First REIT is poised for some changes. On Jan 13, it announced it received a preliminary non-binding letter of intent from PT Siloam International Hospitals Tbk to acquire First
REIT’s portfolio of hospital assets in Indonesia. 

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“The board has decided to undertake a strategic review to assess the letter of intent and explore all strategic options for First REIT.  Through the strategic review, the board is committed to undertaking a rigorous process to consider all options relating to the business of First REIT, which may include but are not limited to, exploration of joint ventures, strategic partnerships, asset acquisitions and asset divestments, with a view to delivering sustainable long-term value for our unitholders,” says First REIT.