First Reit FY 2016 AGM - Notes
Distributions
DPU has been rising since IPO and the manager intends to keep this going.
Funding
Funding from local banks: Refinancing was done at "comparable terms" despite rising interest rates.
Funding will be raised with a balance of debt and equity. Gearing remains low at 31%. In terms of fund raising through equity, the Dividend Reinvestment Plan (DRP) has a take-up rate of 20-30% and will only be utilised when needed.
A unitholder asked about the rationale for the issuance of perpetual securities given the low gearing ratio. The CEO replied that firstly, they seek to have a balance of funding between debt and equity. (Perpetual securities are considered equity) The cost of equity when these were issued was ~6.8% (based on distribution yield) while the cost of the perpetuals was 5.68%. As the cost of equity is more than the cost of the perpetuals, it is viable. CEO says they are unlikely to issue more perpetuals.
AEI
Sponsor may carry out AEI at their own cost. (I think CEO mentioned that this was done in the Jakarta property)
Expansion of Surabaya hospital will be carried out without disruption to operations. When completed in 2019, rental income from the property will be tripled.
Looking Ahead
Three hospitals are targeted for acquisition this year. Out of the three, one is operational and two have been completed and are awaiting operational licenses.
At least 8 hospitals are available for acquisition from sponsor Lippo Karawaci which are in the pipeline for 2018 and beyond.
The manager aims to acquire 1 hospital a year from the sponsor. (First Reit has ROFR to acquire a pipeline of 43 hospitals from sponsor Lippo Karawaci.)
Left midway to attend Suntec Reit AGM
Vested at average price of $1.28
DPU has been rising since IPO and the manager intends to keep this going.
Funding
Funding from local banks: Refinancing was done at "comparable terms" despite rising interest rates.
Funding will be raised with a balance of debt and equity. Gearing remains low at 31%. In terms of fund raising through equity, the Dividend Reinvestment Plan (DRP) has a take-up rate of 20-30% and will only be utilised when needed.
A unitholder asked about the rationale for the issuance of perpetual securities given the low gearing ratio. The CEO replied that firstly, they seek to have a balance of funding between debt and equity. (Perpetual securities are considered equity) The cost of equity when these were issued was ~6.8% (based on distribution yield) while the cost of the perpetuals was 5.68%. As the cost of equity is more than the cost of the perpetuals, it is viable. CEO says they are unlikely to issue more perpetuals.
AEI
Sponsor may carry out AEI at their own cost. (I think CEO mentioned that this was done in the Jakarta property)
Expansion of Surabaya hospital will be carried out without disruption to operations. When completed in 2019, rental income from the property will be tripled.
Looking Ahead
Three hospitals are targeted for acquisition this year. Out of the three, one is operational and two have been completed and are awaiting operational licenses.
At least 8 hospitals are available for acquisition from sponsor Lippo Karawaci which are in the pipeline for 2018 and beyond.
The manager aims to acquire 1 hospital a year from the sponsor. (First Reit has ROFR to acquire a pipeline of 43 hospitals from sponsor Lippo Karawaci.)
Left midway to attend Suntec Reit AGM
Vested at average price of $1.28
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