First REIT (FREIT) recently announced that Dr. Ronnie Tan, who had been the CEO of its REIT Manager since 2006, will be retiring and thus stepping down from his position with effect from 19 May 2017.

As part of the succession plan by the Board of Directors, Mr. Victor Tan, the CFO of the Manager, will be taking over the role of Acting CEO and Executive Director of the Board. He will continue to assume the role of CFO until a new CFO is appointed.

We believe FREIT has achieved significant milestones over the past few years while Dr. Ronnie Tan was CEO, growing its investment properties base from S$618m in 2011 to S$1.3b as at end 2016. Notably, FREIT’s DPU increased at a stable and healthy CAGR of 3.9% from 7.01 S cents in FY11 to 8.47 S cents in FY16.

Nevertheless, we expect this transition to be seamless, as Victor has been at First REIT since 2008 and has been overseeing the financial operations and financial risk management of FREIT. Furthermore, we have been actively engaging Victor since we started coverage on FREIT back in Jan 2011.

Maintain HOLD and S$1.32 fair value estimate on FREIT.

Source: OCBC Research - 25 May 2017