First Reit - Siloam Hospitals Button, Lippo Plaza Button and Siloam Hospital Yogyakarta acquisition

For Financial Year 2017, the manager has acquired 1 property and 1 more in process,

• Siloam Hospitals Buton  and Lippo Plaza Buton (It is a one single story retail that connected to the Hospital) which completed in 10 October 2017, based on the projection in 2016 Financial year it will contribute additional of 0.07 cent
• For the hospital the base rent is $1.6 million and will start to increase after 5 years. No variable rent for the first 5 years.
• For the Plaza base rent is $1.242 million and will start to increase after 5 years
• The lease term for both properties is 15 years + 15 years
• Total base rent will yield around 10%
•  Siloam Hospitals Yogyakarta  that was announced on 13 October 2017 to be acquired and based on the projection in 2016 Financial year it will contribute additional 0.03 cent.
•  Base rent of $2.43 million, resulted about 8.8% yield and will start to increase after 5 years. No variable rent for the fist 5 years
• The lease term is 15 years  + 15 years

The current dividend from Q1FY17 to Q3FY17 has been flat at 2.14 cent, assuming it will be the same for Q4FY17 then it will bring the total dividend of  8.56 cent which is an increase from 8.47 cent - an increase of 1% from previous year which lag from what I projected of 2% per year.

Based on the cost and the yield above, if I to assume 0.03 cents on the lower end for the future acquisition and available of debt /$150 millions before reaching 40%, First Reit should be able to add another 0.15 cent. With this, First Reit has a potential to give 8.71 cent base on the current dividend yield excluding the organic rental growth.

Base on the previous purchase  the following properties will have their base rent adjusted and variable rent kick in which will provide a little boost to 2018 dividend

1. Siloam Sriwijaya : $3.9 million. Base rental increment and variable rent start from 29 Dec 2017
2. Siloam Hospitals Kupang & Lippo Plaza Kupang: $6.9m base rental increment and variable rent start from 14 Dec 2018

As for the most recent one, it will start at the later years and notice the year has been increase from the previous 3 years to 5 years now

1. Siloam Hospitals Labuan Bajo: $1.85 million. Base rental increment start and variable rent from 30 Dec 2021
2. Siloam Hospitals Buton And Lippo Plaza Buton: $2.84 million. Base rental increment and variable rent  start from 10 Oct 2022

I am expecting for the rest of the properties will have their rental adjust upward even not a lot as the current inflation from Jan to Sep is 0.6%.

Past First Reit Post