First REIT

First REIT: OCBC maintains Hold rating but raises TP to $1.31 from $1.00. Note that REIT recently announced its proposal to acquire two Indonesian hospitals from its sponsor Lippo Karawaci (Lippo) for a total purchase consideration of $190.4m. This would be funded largely by debt and the issuance of new units to a smaller extent to Lippo. House positive on the acquisitions as it offers DPU accretion of 6-13% for FY13-14F, according to estimates, while also providing stability and visibility to unitholders. Adopt a DDM model (cost of equity: 7.7%; terminal growth rate: 1.0%) as new valuation matrix (previously RNAV). Coupled with higher DPU forecasts, bump up fair value estimate from $1.00 to $1.31, but maintain HOLD rating as believe that the market has largely priced in the positives from these acquisitions and FREIT’s continued transition to a sizeable healthcare REIT in the region.