First REIT (FREIT) reported a stable set of 4Q16 results which met our expectations. Gross revenue and NPI rose 5.1% and 5.2% YoY to S$27.0m and S$26.7m, respectively, and this was driven largely by contribution from its Siloam Hospitals Kupang & Lippo Plaza Kupang property which was acquired in Dec 2015. DPU increased 1.9% to 2.13 S cents.

For FY16, FREIT’s gross revenue grew 6.3% to S$107.0m and its NPI was up 6.6% to S$105.8m, with the latter forming 99.0% of our full-year forecast. DPU of 8.47 S cents represented growth of 2.0% and made up 99.4% of our FY16 projection.

Looking ahead, FREIT believes opportunities for further yield accretive acquisitions in Indonesia’s healthcare sector remain strong, given its rightof-first-refusal to the growing pipeline of 43 hospitals from its sponsor, Lippo Karawaci.

We maintain HOLD on FREIT, but will review our S$1.36 fair value estimate pending an analyst briefing.

Source: OCBC Research - 18 Jan 2017