First REIT's (FREIT) 2Q18 results were within expectations. Gross revenue rose 5.3% YoY to S$28.9m, forming 24.4% of our full-year forecast. This was mainly on the back of additional contribution from Siloam Hospitals Buton & Lippo Plaza Buton and Siloam Hospitals Yogyakarta, both of which were acquired in 4Q17, as well as from existing properties.

DPU for the quarter inched up 0.5% YoY to 2.15 S-cents, forming 24.6% of our full-year forecast. Gearing remains healthy at 34.2%, as at 30 June 2018, while 60.7% of its total debt is on a fixed rate basis.

FREIT has previously entered into a term loan facility to refinance its S$100.0m Fixed Rate Notes (FRN) due 22 May 2018 with a tenure of 6 months and an option to extend for a further 6 months.

Apart from this FRN and S$10.0m due in 2019, FREIT has no refinancing needs till 2021. Pending an analyst briefing later, we maintain our BUY rating but place our fair value estimate of S$1.48 under review.

Source: OCBC Research - 18 Jul 2018