First Reit: to acquire i) Mochtar Riady Comprehensive Cancer Centre (MRCCC) for $174.6m, and ii) Siloam Hospitals Lippo Cikarang (SHLC) for $35m. Purchase price for both properties are lower than the appraised values of $208.5-216m and $40-41.3m respectively. Both properties come with 15 + 15 yrs leases…
MRCCC to be partially financed by debt and rights issue, and SHLC to be fully financed through a 5-for-4 rights issue at issue price of $0.50/unit to raise ~S$173m. The issue price is at 49% discount to last traded price of $0.98 …
Deal is subject to unitholders approval. If completed, First’s weighted avg lease to expiry (WALE) will increase to 12.4 yrs from 10.6yrs, asset size will grow to $603m from $346m. Based on 9M10 numbers, mgt forecasts yield to rise to 6.76% from 6.06%, on theoretical ex-rights price of $0.70; NAV to drop to $0.76 from $0.98. Sias has an Overweight rating with $1.13 target (cum-rights).
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