Post Reply
1-8 of 8
continue the company.
Less risky now than before...
gearing will come down to very comfortable levels...
Less risky now than before...
gearing will come down to very comfortable levels...
Alignment ( Date: 08-Apr-2026 14:47) Posted:
|
📉 First REIT &mdash Downside Risk Scenarios (Post‑ Divestment)
Base assumptions (starting point)
- Sustainable DPU (steady state, excl. specials): ~1.39¢
- Current price reference: ~$0.25
- Normalised yield: ~5.5&ndash 5.7%
- Gearing: ~16&ndash 20% post‑ divestment
Scenario 1: Delayed redeployment (most likely downside)
What goes wrong
- Divestment completes, but:
- Cash sits idle for 6&ndash 12 months
- Manager cannot find assets at acceptable yield
- Interest income earned < lost rental income
Impact
- DPU temporarily drops another 10&ndash 15%
- Sustainable DPU slides to ~1.20&ndash 1.25¢
Market reaction
REIT market hates idle capital.
| Metric | Outcome |
|---|---|
| DPU | ~1.23¢ |
| Fair yield demanded | ~6.5% |
| Implied price | $0.18&ndash 0.19 |
🔻 Downside from $0.25: ~25%
✅ This is the most probable bear case
Scenario 2: Redeployment at lower yields (structural reset)
What goes wrong
- Assets acquired in Japan / developed markets yield:
- 4.5&ndash 5.0% (typical healthcare cap rates)
- No leverage used (conservative balance sheet)
- Interest savings do not fully offset income loss
Impact
- Sustainable DPU resets permanently to ~1.15&ndash 1.20¢
- Growth remains muted
Market reaction
Market reprices First REIT closer to defensive healthcare REITs &mdash but without PLife&rsquo s quality premium.
| Metric | Outcome |
|---|---|
| DPU | ~1.18¢ |
| Fair yield demanded | ~6.0&ndash 6.5% |
| Implied price | $0.18&ndash 0.20 |
🔻 Downside: ~20&ndash 28%
⚠ ️ This is a quiet but lasting downside, not a panic sell‑ off.
Scenario 3: Execution misstep / overpaying for assets
What goes wrong
- Manager:
- Overpays to rebuild scale quickly
- Accepts weaker tenants or shorter WALE
- Result: asset quality dilution
Impact
- DPU falls
- Risk perception rises
- Yield demanded widens sharply
| Metric | Outcome |
|---|---|
| DPU | ~1.10&ndash 1.20¢ |
| Yield demanded | ~7.0&ndash 7.5% |
| Implied price | $0.15&ndash 0.17 |
🔻 Downside: ~30&ndash 40%
✅ Less likely, but severe if it happens
Scenario 4: Macro / rates shock (external risk)
What goes wrong
- Rates stay higher for longer
- REIT risk premium expands across the board
- Even strong balance sheets reprice
Impact (even if operations are fine)
| Metric | Outcome |
|---|---|
| DPU | ~1.39¢ (unchanged) |
| Yield demanded | ~6.5&ndash 7.0% |
| Implied price | $0.20&ndash 0.21 |
🔻 Downside: ~15&ndash 20%
This affects all REITs, but First REIT lacks growth to offset it.
🧮 Summary: Downside scenarios at a glance
| Scenario | Probability | Price Range | Drawdown |
|---|---|---|---|
| Delayed redeployment | High | $0.18&ndash 0.19 | ‑ 25% |
| Lower‑ yield reset | Medium‑ High | $0.18&ndash 0.20 | ‑ 20&ndash 28% |
| Execution error | Low‑ Medium | $0.15&ndash 0.17 | ‑ 30&ndash 40% |
| Macro re‑ rating | Medium | $0.20&ndash 0.21 | ‑ 15&ndash 20% |
First REIT&rsquo s business updates for the first quarter ended 31 March 2026, will be released after market closes on Thursday, 23 April 2026
They should be doing an independent shareholder vote to see if the majority of shareholders agree with continuing the company following such a big strategic pivot.
finally some good news and a new beginning, getting out of Indonesia is good thing.
Rupiah too weak...
Hopefully they buy some good properties, else return us our investments.
Let us see....
Rupiah too weak...
Hopefully they buy some good properties, else return us our investments.
Let us see....
First REIT to divest Indonesian assets for $471.5 mil REIT to pivot to developed markets
First REIT has proposed to divest its assets in Indonesia for a total agreed property value of $471.5 million.
On April 1, the REIT announced that it had entered into definitive agreements to sell eight hospital assets to Siloam for IDR5.1 trillion or $389.2 million. The hospitals are: Siloam Sriwijaya, Siloam Hospitals Purwakarta, Siloam Hospitals Lippo Village, Siloam Hospitals Kebon Jeruk, Siloam Hospitals Bali, Siloam Hospitals Kupang, Siloam Hospitals Baubau and Siloam Hospitals Manado. The amount represents a 2.8% premium to the average of two latest independent valuations, says the REIT.
At the same time, the REIT agreed to divest three non-hospital assets for IDR1.1 trillion or $82.4 million. The divestment comprises the sale of Lippo Plaza Baubau (LPB) and Hotel Aryaduta Manado (HAMD) to PT Lippo Karawaci Tbk (LK) and a prepaid lease agreement in respect of Lippo Plaza Kupang (LPK) with PT Bumi Sarana Sejahtera, a wholly-owned subsidiary of PT Metropolis Propertindo Utama (MPU).
Both transactions were divested at a 2.1% premium over the average of the latest two valuations conducted commissioned by the REIT trustee and the manager.
In connection with the transaction, the REIT will obtain full recovery of the current MPU rental arrears of $6.9 million.
At the same time, First REIT has entered into put option agreements with Siloam, which will enable it to divest the six remaining hospitals in its portfolio at an agreed property value of IDR3.9 trillion or $294.8 million.
The potential put option divestments relate to the REIT&rsquo s interests in Siloam Hospitals Labuan Bajo, Siloam Hospitals TB Simatupang, Siloam Hospitals Makassar, Mochtar Riady Comprehensive Cancer Centre, Siloam Hospitals Lippo Cikarang and Siloam Hospitals Yogyakarta.
Upon completion of the proposed divestments, the REIT intends to use the proceeds to pay off its credit guarantee & investment facility (CGIF) bonds, standby letter of credit and syndicated loan facilities. The repayment will reduce the REIT&rsquo s aggregate leverage to 16.7%, providing pro forma annual interest cost savings of $18.8 million.
The REIT also intends to make a special distribution of about $9.7 million, which is expected to be declared across the next two financial quarters after the completion of the transactions.
&ldquo The proposed divestments, along with the potential put option divestments, eliminate First REIT&rsquo s IDR/SGD foreign currency volatility and income drag which had impacted unitholder returns,&rdquo says Victor Tan, executive director and CEO of the manager.
&ldquo The two-tranche divestment prioritises DPU (distribution per unit) stability and support distribution resilience while recycling capital from non-core and non-healthcare assets, and assets with rental arrears,&rdquo he adds.
&ldquo The manager maintains certainty for the divestment of remaining Indonesia assets and timing flexibility for redeployment for the put option properties. More importantly, the proposed divestments are expected to optimise First REIT&rsquo s capital structure to position First REIT for growth, with a focus on developed markets,&rdquo Tan continues.
First REIT to focus on developed markets exploring potential acquisition opportunities
As part of its previously-announced strategic review, the REIT says it will be focusing on developed markets, which will bring about various benefits including a more predictable macroeconomic and geopolitical environment, risk adjusted returns with lower equity risk premiums in developed markets as well as lower cost of debt compared to emerging markets.
Other reasons include higher foreign exchange and currency stability, risk adjusted returns with lower equity risk premiums in developed markets, exposure to tenants with high credit quality, as well as higher property liquidity and valuation transparency.
Following the proposed divestments, the REIT says it will focus on looking at potential acquisition opportunities in Asia-Pacific (APAC) &mdash including Singapore, Japan and Australia &mdash to &ldquo fully capture the aforementioned benefits of exposure&rdquo to developed markets.
The REIT will also continue to manage its existing properties in Singapore and Japan while looking at opportunities for capital recycling on these properties at the same time.
&ldquo The board is encouraged with the progress of the strategic review as the proposed divestments provide transaction certainty amidst an increasingly challenging macroeconomic environment in Indonesia,&rdquo says Christopher James Williams, chairman and non-independent non-executive director of the manager.
&ldquo Fully committed to aligning our interests with Unitholders, the manager has undertaken to completely waive its divestment fee of $2.4 million for the proposed divestments,&rdquo he adds.
The divestments are subject to unitholders&rsquo approvals, which will be sought at an extraordinary general meeting (EGM) tipped to take place this June.
According to the REIT manager, the proposed transactions represent the &ldquo best available offer&rdquo .
SAC Capital has been appointed as the REIT&rsquo s independent financial advisor (IFA) for the trasnactions.
Upon obtaining unitholders&rsquo approval, the divestments are expected to be completed in August.
Good lah this one got special distribution and manager waived divestment fee
good news finally
good news finally
First REIT (SGX: AW9U) called for a trading halt with immediate effect on Wednesday morning, 1 April 2026.
The Business Times +2
- Reason for Halt: The manager announced a major strategic move to divest its entire Indonesian portfolio for approximately S$471.5 million.