The manager of First REIT has declared a distribution per unit (DPU) of 1.31 cents for the 2HFY2021 ended December, 29.2% lower than the DPU of 1.85 cents declared in the corresponding period in the year before.
DPU for the 4QFY2021 stood at 0.66 cents.
The half-year DPU brings First REIT’s FY2021 DPU to 2.61 cents, which is down 37.1% from the 4.15 cents in the FY2020.
The lower DPUs for the 2HFY2021 and FY2021 were mainly due to the enlarged unit base. The REIT issued 791.06 million rights units on Feb 24, 2021, which are entitled to take part in the distributions released from the 1QFY2021 to 4QFY2021.
Excluding the new rights units issued, First REIT’s DPU would have been up 23.4% y-o-y to 5.12 cents on an adjusted basis.
Rental and other income for the 2HFY2021 increased 54.6% y-o-y to $63.4 million, mainly due to the accounting treatment under the Financial Reporting Standards (FRS) 116 Leases where rental income from the restructured master lease agreements will be recognised on a straight-line basis for the entire lease term, says the REIT manager.
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As the rental income from the restructured master lease agreements of the 14 Indonesia hospitals has a minimum annual escalation of 4.5%, rental income was recognised on a straight-line basis for the entire lease term.
Property operating expenses for the 2HFY2021 fell 25.4% y-o-y to $809,000.
Correspondingly, net property income (NPI) for the half-year period was up 56.8% y-o-y to $62.6 million.
Distributable amount grew 41.5% y-o-y to $21.2 million.
As at Dec 31, 2021, First REIT’s portfolios were revalued at $962.4 million, 2.4% higher over their carrying value from the year before.
The REIT, as at Dec 31, 2021, reported a portfolio occupancy rate of 100% with a weighted average lease expiry (WALE) of 14.0 years by gross floor area (GFA).
“In a year of structural adjustments to our leases and continued challenges from the pandemic, we are heartened to have achieved a stable set of results for FY2021. At the same time, the support of our steadfast unitholders to all our strategic initiatives, and together with our committed sponsor, have enabled the trust to maximise returns for our unitholders to deliver total unitholder returns of 59.0%, and a 42.8% increase in unit price for FY2021,” says Victor Tan, CEO of the manager.
“Going forward, we will continue to execute our refreshed strategy to deliver long-term value for our unitholders,” Tan adds.
On First REIT’s foray into the Japan nursing home market, Tan says thanked the REIT’s unitholders for their “unwavering support and vote of confidence in the trust’s strategic decision” to acquire the properties.
“These assets, strategically located in a developed healthcare market, will further bolster First REIT’s income streams to deliver sustainable returns for our unitholders. Moving forward, under the strategic pillars of our 2.0 growth strategy, we also intend to diversify our funding sources to enhance our capital structure, capitalise on relevant megatrends such as Environment Social Governance (ESG) and ageing population demographics factors to boost growth, as well as reshape our portfolio through the recycling of non-core and non-healthcare assets,” says Tan.
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Looking ahead, First REIT is positive on the demand for private healthcare, which continues to remain supported over the long-term.
The REIT adds that it will continue to seek accretive prospects from its network of healthcare assets from its sponsor group.
For the trust’s new Japanese market, demand for nursing homes will continue to rise as Japan is poised to become the first “super-aged” nation in the world with a projection that approximately 35.5% of its population to be over the age of 65 by 2040.
“Additionally, the Japanese society has come to welcome the availability and use of elderly support facilities, driven by factors including long-term care insurance introduced by the government and shrinking household sizes in Japan,” says First REIT in its Feb 11 statement.
Unitholders will receive their distributions on March 29.
As at 10.09am, units in First REIT are trading 0.5 cent lower or 1.59% down at 31 cents.
Photo: First REIT
