The manager of first REIT has completed its strategic initiatives to restructure its business, recapitalise its balance sheet and reposition itself for sustainable future growth.
The restructured master lease agreements for PT Lippo Karawaci Tbk and the restructured master lease agreements for PT Metropolis Propertindo Utama, which is effective from Jan 1, have extended the lease term for the Lippo Karawaci Hospitals and the Metropolis Hospitals to Dec 31, 2015, with an option for a further 15-year renewal term with the mutual agreement of both the relevant master lessors and lessees.
It also extended First REIT’s weighted average lease expiry (WALE) for its portfolio from 6.4 years to 12.3 years as at Dec 31, 2020.
Siloam has also been added as a party to each of the Lippo master lease agreements and a subsidiary of Siloam has been added as a party to each of the Metropolis master lease agreements, to establish the direct payment of part of the rental amounts payable in respect to each of the Lippo hospitals and each of the Metropolis hospitals by Siloam.
SEE:Frasers Property commits to be net-zero carbon corporation by 2050
First REIT was also able to recapitalise and strengthen its balance sheet through its bankers and investors. It secured a term loan facility of $178.5 million and a revolving credit facility of $42.5 million with an accordion option for a $39 million increase in commitments from OCBC Bank and CIMB Bank in December 2020.
With this, the REIT has no refinancing requirements till 2022.
In addition, First REIT has, through the completion of the renounceable and non-underwritten rights issue in February, reduced its leverage ratio as at Dec 31, 2020, on a pro forma basis to 34.6% from 49.0%.
The weighted average debt maturity has also been extended to 1.78 years as at March 1, as compared to 1.22 years as at Dec 31, 2020.
“Taking into consideration the ongoing Covid-19 pandemic, and current Indonesia economic and operating environment that has adversely impacted our tenants, we are heartened to see that unitholders recognised the necessity and supported our strategic move to restructure the affected master leases, which will provide for a sustainable rental structure in the long run,” says Victor Tan, CEO of the manager.
“The successful recapitalisation of our balance sheet and refinancing of our debt obligations through the loan facility of up to $260 million has additionally improved our financial flexibility. With these strategic pillars in place, the manager can embark on repositioning First REIT for future growth,” Tan adds.
Units in First REIT closed flat at 26 cents on May 18.
