The manager of First REIT has declared distribution per unit (DPU) of 1.85 cents for the 2HFY2020 ended December, some 57.0% lower than the DPU of 4.30 cents in 2HFY2019.
4QFY2020 DPU stood at 0.84 cents, while DPU for the FY2020 came in at 4.15 cents, reflecting a 51.7% decline from DPU of 8.60 cents in FY2019.
Rental and other income for the half-year period fell 28.9% y-o-y to $41.0 million. Net property and other income fell 29.4% y-o-y to $39.9 million mainly due to the additional two-month rental relief extended to tenants in Indonesia for September and October 2020.
Accordingly, distributable income for 2HFY2020 fell 56.3% y-o-y to $15.0 million.
For the FY2020, rental and other income fell 30.9% y-o-y to $79.6 million due to the rental reliefs given to all tenants in May and June 2020. Another two months’ worth of rental reliefs in September and October 2020, was extended to its Indonesian tenants.
Accordingly, FY2020 net property and other income fell 31.4% y-o-y to $77.5 million.
Distributable income for FY2020 fell 51.2% y-o-y to $33.4 million.
As at Dec 31, the trust’s gearing stood at 49.0% with interest cover at 3.6 times.
Cash and cash equivalents as at Dec 31 stood at $19.3 million.
Unitholders can expect to receive their distributions on March 24.
“Our FY2020 performance is a reflection of the confluence of challenges that First REIT is facing. These include the financial stress facing our largest lessee, PT Lippo Karawaci Tbk, the upcoming refinancing hurdle where 39.8% of our debt is due in less than two months and the initial term of the master lease agreements in respect of Siloam Hospitals Surabaya, Siloam Hospitals Kebon Jeruk, Siloam Hospitals Lippo Village and Imperial Aryaduta Hotel & Country Club which will expire in December 2021,” says Victor Tan, CEO of the manager.
“First REIT is facing an urgent need to recapitalise. With the proposed plans, First REIT will be able to meet its immediate debt repayment obligations on March 1 and deleverage its balance sheet, extend the weighted average debt maturity by 11 months and pave the way for further diversification of funding sources as part of the plan to further optimise First REIT’s balance sheet,” Tan adds.
“With the proposed master lease agreements restructuring, First REIT will have greater certainty on its cash flows and valuations. Through the recapitalisation exercise, our gearing will be reduced and we will have a debt headroom in excess of $300 million. This ensures that First REIT is well-placed to seize yield-accretive acquisition opportunities outside of Indonesia and drive diversification efforts either through our sponsor, OUE Lippo Healthcare Limited’s Pan-Asian healthcare network which spans countries like Japan, China and Myanmar, or from third parties,” he concludes.
In its outlook statement, the REIT adds that it will continue to work with its tenants to ensure “strict precautionary measures” to prioritise the health and safety of its patients, staff and visitors, amid the Covid-19 pandemic.
As at 9.13am, units in First REIT are trading 0.5 cent higher or 2.0% up at 25 cents.
