First REIT - OCBC Investment 2023-04-25: Mixed Results But Fundamentals Still In Play

• First REIT’s 1Q23 rental income grew by 4.9% y-o-y to S$26.8m, slightly missing our expectations due to foreign exchange fluctuations.
• Higher rental income from built-in rent increment across its properties in Singapore and Indonesia more than offset the loss of rental income following the divestment of Siloam Hospitals Surabaya in Sep 2022.

First full quarter of rental contribution from Japan nursing homes

• - Read this at SGinvestors.io -
• Since most of its Japan properties are leased on a single net basis, its net property income (NPI) margin was weighed down by higher inflation, coming in at 96.3% versus 98.8% in FY22. Correspondingly, NPI increased by a narrower 2.7% y-o-y to S$25.8m.

Higher aggregate leverage and cost of borrowing

• - Read this at SGinvestors.io -
• First REIT expects its cost of debt to stabilize at these levels, given that majority of its floating rate loans comprise of JPY debt, and that it intends to further increase its hedging ratio further going forward.

Continue to monitor potential tenant default risk

• Read more at SGinvestors.io.

Ada Lim OCBC Investment Research | https://www.iocbc.com/ 2023-04-25 SGinvestors.io

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