First REIT: Daiwa has a non-rated report on the healthcare REIT. Highlights:
1) Receives SGD rents for its Indonesian assets. The structure is fixed-based rent with annual escalation up to 2%.
2) Master lessee (sponsor) bears all the currency risk. Master lessee has considerable funding capacity to meet master-lease rental commitments. Sponsor owns about 33% of First REIT.
3) WALE of 11.2 years. Management understands growth must come from acquisitions.
4) Managmenet expecting 1-2 acquisitions for 1H and 2H respectively.
5) The REIT has right of first refusal (ROFR) for the sponsor’s healthcare properties. The sponsor has 30 hospitals in the pipeline.
6) Management guided for 3 AEIs of existing properties
7) Government’s is targeting 100% healthcare coverage vs the current 50%, boding well for the Indonesian healthcare industry
Currently trading at 6.2% FY15 consensus yield.
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