First REIT acquires 2 Indonesian hospitals

Singapore’s healthcare real estate investment trust First REIT on Friday said it has completed the acquisition of two Jakarta hospitals.

The two new Indonesian healthcare properties include the Mochtar Riady Comprehensive Cancer Centre as well as Siloam Hospitals Lippo Cikarang, a six-storey hospital that began operations in 2002.

With these acquisitions, First REIT said it has crossed a significant milestone as its assets under management have almost doubled to S$612.8 million as at December 31.

The trust’s manager revealed that it aims to achieve a portfolio size of S$1 billion in two to three years.

Dr Ronnie Tan, chief executive of Bowsprit Capital Corporation, which is the manager of First REIT, said: “We believe that the healthcare sector in Indonesia holds vast potential for expansion as healthcare infrastructure continues to undergo extensive development.”

Dr Tan added that having established First REIT’s toehold in Indonesia, the trust will be able to grow its portfolio further across locations and medical specialisations in the country.

First REIT’s sponsor, Lippo Karawaci, will be the master tenant of both the properties after completion.

Lippo Karawaci is Indonesia’s largest listed property company by total assets, revenue and net profit.

Mr Ketut Budi Wijaya, president director of Lippo Karawaci, said: “Moving forward, Lippo Karawaci has plans to grow our healthcare business by having 25 hospitals in the next 5 years in order to meet domestic and global healthcare demands.”

He added that this will, in turn, provide a very strong pipeline for First REIT as it has the first right of refusal to acquire these properties.

In addition, First REIT said that the acquisitions will raise the total gross floor area of its portfolio by 58.7 per cent, from 83,638 square metres to 132,696 square metres.

Meanwhile, the total number of hospital beds in relation to First REIT’s Indonesia portfolio will increase by 43.8 per cent, from 537 to 772.

“Armed with an enlarged portfolio, we are well equipped to deliver long-term returns to our unit-holders by way of an improved distribution yield,” added Dr Tan.

Meanwhile, the manager of First REIT revealed that based on projection year 2011, the trust’s gearing level will stand at about 17 per cent, which is significantly lower than the regulatory limit of 35 per cent.

The manager of the trust added that this will provide it with sufficient headroom for future accretive acquisitions, and it will continue to look out for other healthcare-related assets in Asia to further raise its asset base.

Source : Channel NewsAsia – 31 Dec 2010

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