First REIT Review - a REIT that I am happy with 6.5% dividend and growing

My Reason why I own First REIT

1. Gearing around 30%

Thing to note here even the gearing drop, it is basically replaced by perpetual securities

2. Lease Expiry

With the earliest expiry in 2021, it will be good to keep for another at least 4-5 years and I will need to watch out when it coming near to 2020 if the management will be proactively renew the lease

3. Price to Book Value (PB Ratio)

With current price of $1.3 and Book value of $1.029, it translates to PB 1.26. It is trading at the premium of 26% which I am comfortable with due to the it is on healthcare class and defensive of the assets

4. Future Acquisition

The sponsor has plenty of property to be injected into First REIT

5. Yield

Looking in the past 4 years (2011-2015) it has been growing from 7 cents to 8.3 cents which is about 4% CAGR. Please note in 2012 there is a distribution included from the gain of disposal.
With 2016 near the end it is likely to end up with 8.46 cents and if we to include this fifth year the CAGR will around 3%.

Assuming nothing change in 5 years ahead and based on 2% increment on the dividend, we will end up with around 0.0916 dividend and with the current price this will translate into 7% yield
And with the new acquisition coming, this will further increase the yield.

6. Management Ownership

DR Ronnie has been one of the active to buy from the market and this is a positive sign to own First REIT

7. Risk I am taking

1. Interest rate hike will impact the distribution.
2. Large concentration of the lessee of Lippo Group
3. De listing... there is a rumour on this, however the management has clarified this.
4. Feel Free to share with me :)

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