Is First REIT A Good Buy In 2026? [Fundamental Analysis]

In this article, we'll conduct a fundamental analysis and review of First REIT and its suitability to achieve the following investment objective: To deliver a stable dividend yield of 5% to 6% per year while having high capital preservation ability.

Business Description

First REIT is a Healthcare REIT that was listed in 2006 and owns healthcare properties with the majority of its revenue being derived in Indonesia.

What I Like About :

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What I Do Not Like About

• High tenancy concentration risk of which the main tenant had shown signs of weakness (nearly defaulted) in 2020. As such, investors will have to pay special attention to the health of the tenant to avoid a repeat.
  

• High foreign exchange rate exposure to the Indonesia Rupee which, historically, has been performing very poorly against the Singapore Dollar.

Updates From Recent Performance (FY 2025)

General Comments:

• Management has embarked on a strategic review to divest their hospital assets in Indoneisa following a non-binding letter of intent from PT siloam International Hospitals TBK (see next page for more detail). If implemented, it will radically change the profile of First REIT as a healthcare REIT as their underlying exposure will be completely different pre and post the restructuring.

  
  

• On a local currency basis, operational performances improved across the properties from the built-in increment and performance-based rental. However, on the SGD basis, gross revenue and net property income decreased by 1.6 % and 1% due to FX losses.  As a result, DPU from operations decreased by -8.17%.

  
  

• During the year, the management has divested Imperial Aryaduta Hotel & Country Club which is clearly a non-core asset. On a like for like basis, First REIT’s portfolio decreased by 6.2% due to FX losses.
  

• Gearing ratio increased by 2.5% to 42.10% at the back of lower portfolio valuation and a stable borrowing size. Cost of borrowing had improved by 50 basis points.

Positive Headwinds:

• If the restructuring goes well and the management manages to transit into healthcare properties within established developed markets (like parkway life), the future prospect of the REIT may be bright.

  
  

Negative Headwinds:

• The risk of further currency weakening – especially for the Indonesia Rupee – against SGD may be high in FY2026 at the back of heightened global uncertainty and the impacts of the ongoing conflict in the middle east that is set to drive inflation higher. This will still be seen in FY2026 performances as the divestment strategy gets executed over the next 12 months

  
  

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Disclaimer:

This article is meant to be the opinion of the author

This article is for information purposes only

This article should not be seen as financial advice

This advertisement has not been reviewed by the Monetary Authority of Singapore