SINGAPORE (Jan 13): AmFraser Securities has started coverage on First Real Estate Investment Trust with a “buy” rating and $1.38 price target.
The healthcare REIT’s projected 6.4% FY2015 yield is anchored by long master leases, with 95% of its rental income from Indonesia’s healthcare sector backed by its sponsor Lippo Karawaci and Siloam Hospitals, according to AmFraser analysts Wong Hong Wei and Wilson Liew.
Having acquired 12 properties, enlarging its portfolio nearly fourfold to $1.2 billion, since its IPO in 2006, First REIT can expect to buy another 28 assets, especially in Indonesia.
“First REIT’s Indonesia hospitals offers exposure to the Indonesia healthcare market which has a deep potential, given the positive developments in nationwide healthcare insurance, population growth and economic growth,” the analysts wrote in a note today.
Some 98% of the REIT’s rental income is denominated in Singapore dollars, shielding it from weakness in the Indonesian rupiah, they said.
Also, some 93% of its debt is based on fixed rates and matures only in 2017, keeping it safe from any increase in interest rates in the short term, they added.
“Overall, we find First REIT very attractive with highly visible income with all its rentals from master leases, and a sponsor which is active in development.”
First REIT shares rose 1.2% to $1.29 at 2:00pm (0600 GMT).
