First REIT (FREIT) announced that it has secured a new S$50m revolving credit facility and the extension of the maturity date of two existing term loan facilities, totalling S$122m.

Based on our estimates, FREIT’s outstanding debt due this year would now be reduced from S$141.6m to a manageable level, in our view, of ~S$20m. The revolving credit facility will be used to fund future acquisitions and working capital requirements.

This follows FREIT’s recent proposed acquisition of an integrated property on Buton Island, Indonesia, for ~S$28.5m. Therefore, we do not rule out the possibility of further acquisitions in 2H17, given that FREIT currently has a healthy gearing ratio of 31.0%, as at 30 Jun 2017.

For now, we maintain our HOLD rating and fair value estimate of S$1.38.

Source: OCBC Research - 17 Aug 2017