Being a healthcare-focused REIT, investors may assume First REIT wasn't too badly impacted by the pandemic. YahooFinance
Investors would naturally assume that some of the most resilient assets would be hospitals and clinics. Especially during a pandemic.
As a result of this financial stress, First REIT has granted rental relief of two months amounting to S$19.6 million. Also, the REIT manager highlighted that there may be uncertainty with regards to property valuations for the portfolio as valuations are only conducted once a year . If the property values face a significant decline, it could bump up the gearing level and make it tougher for the REIT to undertake acquisitions or to borrow more.However, around 22% of the portfolio’s master leases by gross floor area is set to expire in the second half of 2021.
As a recap, the bulk of First REIT’s portfolio is operated by PT Siloam International Hospitals Tbk, a subsidiary of Lippo Karawaci. Should the restructuring result in a significant decline in rental rates for First REIT’s 16 hospitals, it could materially impact the rental income for the REIT moving forward.
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