First REIT is the first healthcare REIT that is listed on SGX focusing on Asian healthcare industry. When listed in Dec 2006, its property portfolio primarily consists of Indonesian healthcare and healthcare-related assets. They intend to grow its portfolio in Indonesia, Singapore, China, Malaysia, Thailand and Hong Kong. The sponsor of First REIT is Lippo Karawaci, the largest listed broad based property company in Indonesia.
In 2007, the group has grown its portfolio to include 3 properties in Singapore. Currently its portfolio consists of Siloam Gleneagles, Siloam Hospital West Jakarta, Siloam Hospital Surabaya, the Imperial Aryaduta Hotel & Country Club, Lengkok Nursing Home, Senja Nursing Home and Adam Rd Hospital.
Merrill Lynch initiated coverage on the group in February this year and based on the group’s valuation of asset comes out with a NAV of $0.89. Estimated DPU for the company is $0.066 this year which translates to a dividend yield of 8.48% at my purchase price of $0.775 (10 lots). For 2008, group will distribute a minimum 90% of its income. Even if the DPU does not increase from further acquisition in 2008 and assuming 90% of income is distributed, dividend for 2008 will be $0.055 which is a yield of approximately 7.7%. Though the risk is higher due to properties based in Indonesia, the high yield is enticing enough for me to have a share of this counter.