First REIT’s (FREIT) 4Q18 results were within our expectations. Gross revenue grew 2.7% YoY to S$29.3m, supported by contributions from Siloam Hospitals Buton & Lippo Plaza Buton, Siloam Hospitals Yogyakarta and existing properties.

Finance costs grew 21.1% YoY to S$5.9m, largely on the back of higher loan costs and the full quarter interest expenses for the loan drawn down to finance the acquisition of Siloam Hospitals Yogyakarta in 4Q17.

We note that FREIT booked S$5.4m of net fair value losses on investment properties, as a more conservative approach was adopted in the latest valuation exercise.

Receivables have increased 24.7% YoY to S$32.4m, but dropped 34.3% QoQ. 4Q18 DPU came in flat YoY at 2.15 S-cents, bringing FY18 DPU to 8.60 S-cents, which comprises 98.9% of our full-year forecast.

Pending an analyst briefing, we maintain our HOLD rating but place our FV of S$1.13 under review.

Source: OCBC Research - 17 Jan 2019