Should You Invest In First REIT [Fundamental Analysis]

In this article, we'll be conducting a fundamental analysis 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 a high degree of capital preservation ability.

Information Is Accurate Up To Dec 2023

Business Description

First REIT is a Healthcare REIT that was listed in 2006 and owns 32 healthcare properties with the majority of its revenue being derived in Indonesia.

What I Like About First REIT:

• Before the 2020 tenancy event, the performance of the REIT and management had been notable in terms of their consistency in delivering stable distribution per unit.
  

• Overall portfolio’s WALE is high

What I Do Not Like About First REIT:

• 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 (3Q 2023)

General Comments:

• Management has highlighted their growth plan from now till 2027 – which is to increase their portfolio into developed markets to 50% of AUM by FY 2027.

Positive Headwinds:

• No refinancing risk until 2026 of which by then, interest rates would have come back down to a reasonable level which reduces the risk of further increasing the overall cost of borrowing.

Negative Headwinds:

• Further strengthening of the Singapore Dollar against the Indonesian Rupiah may erode distribution per unit despite improving top-line performances

Download Full Report On Telegram

and continue reading my independent analyst report which will provide you with a detailed look at the fundamentals of the stock and a range of price targets to help you out with your investment decision for First REIT:

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"Retire With REITS" eBook/Webinar

If you are new to REIT investing or would like to sharpen your investment knowledge, you can gain access to my webinar and download my e-book: "Retire With REITs" which will give you insights as to how I analyse and select the right REITs to invest in for passive income generation!

- Work In Progress -

Daniel is a Licensed Independent Financial Consultant with MAS and a Certified Financial Planner (CFP®).

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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