Full Year Results Financial Statement And Related Announcement

Financials Archive

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2011 FULL YEAR UNAUDITED FINANCIAL STATEMENTS & DISTRIBUTION ANNOUNCEMENT

Review of the performance

4Q 2011 vs 4Q 2010

Gross revenue for 4Q 2011 increased by 82.0% to S$13.9 million compared to 4Q 2010 mainly due to maiden contributions from the three new properties namely Mochtar Riady Comprehensive Cancer Centre ("MRCCC"), Siloam Hospitals Lippo Cikarang and Sarang Hospital acquired in December 2010 and August 2011.

Property operating expenses for 4Q 2011 increased by 68.9% to S$152,000 compared to 4Q 2010 mainly due to higher operating expenses from the above three new properties.

Interest income for 4Q 2011 increased to S$28,000 compared to 4Q 2010 mainly due to higher fixed deposits amount.

Management fees for 4Q 2011 increased by 61.4% to S$1.4 million compared to 4Q 2010 mainly due to higher net property income and total assets value as a result of the acquisition of the three new properties.

Trustee fees for 4Q 2011 increased by 38.9% to S$50,000 compared to 4Q 2010 mainly due to higher total assets value as a result of the acquisition of the three new properties.

Finance costs for 4Q 2011 increased to S$1.1 million compared to 4Q 2010 mainly due to higher loan amount to finance the acquisition of MRCCC and Sarang Hospital.

Other expenses for 4Q 2011 decreased to S$221,000 compared to 4Q 2010 reflecting the rights issue related expenses incurred in Q4 2010.

Income tax for 4Q 2011 decreased by 37.8% to S$4.2 million compared to 4Q 2010 because of lower deferred tax arising from fair value gain on revaluation of investment properties.

Total return for 4Q 2011 decreased by 61.5% to S$21.3 million compared to 4Q 2010 mainly due to lower fair value gain on revaluation of investment properties partly offset by rental contribution from the three new properties acquired in December 2010 and August 2011.

FY 2011 vs FY 2010

Gross revenue for FY 2011 increased by 78.4% to S$54.0 million compared to FY 2010 mainly due to maiden contributions from the three new properties namely Mochtar Riady Comprehensive Cancer Centre ("MRCCC"), Siloam Hospitals Lippo Cikarang and Sarang Hospital acquired in December 2010 and August 2011.

Property operating expenses for FY 2011 increased by 42.9% to S$570,000 compared to FY 2010 mainly due to higher operating expenses from the above three new properties partly offset by the write back of provision for repair and maintenance.

Interest income for FY 2011 increased to S$104,000 compared to FY 2010 mainly due to higher fixed deposits amount.

Management fees for FY 2011 increased by 73.3% to S$5.3 million compared to FY 2010 mainly due to higher net property income and total assets value as a result of the acquisition of the three new properties.

Trustee fees for FY 2011 increased by 52.0% to S$193,000 compared to FY 2010 mainly due to higher total assets value as a result of the acquisition of the three new properties.

Finance costs for FY 2011 increased by 69.3% to S$3.8 million compared to FY 2010 mainly due to higher loan amount to finance the acquisition of MRCCC and Sarang Hospital.

Other expenses for FY 2011 increased to S$1.7 million compared to FY 2010 mainly due to unrealised exchange loss on USD loan translated at end of the year.

Income tax for FY 2011 decreased by 7.8% to S$9.7 million compared to FY 2010 because of lower deferred tax arising from fair value gain on revaluation of investment properties and the write back of provision for deferred tax as a result of the divestment of Adam Road property.

Total return for FY 2011 decreased by 26.7% to S$51.0 million compared to FY 2010 mainly due to lower fair value gain on revaluation of investment properties partly offset by rental contribution from the three new properties and the gain on divestment of Adam Road property.

Commentary on the competitive conditions of the industry

Despite the volatile economic climate, the Trust's resilient structure has been held out well, providing consistent growth across all its. First REIT believes that all healthcare market in Asia is largely underserved and continues to hold potential growth prospects. For this reason, First REIT will continue to explore yield-accretive acquisitions in Asia.

Going forward, First REIT expects Indonesia to remain a key focus, and the Trust sees strong potential as Indonesia's consumption growth continues to grow, which invariably will increase the demand for quality healthcare services. We have been in discussions with its sponsor PT Lippo Karawaci Tbk to acquire some of its upcoming properties on which it has a right of first refusal.

Singapore's ageing population and current "bed shortage" will continue to drive the demand for more nursing homes and community hospitals. In recent years, the government has introduced further initiatives for improved palliative and tertiary care. First REIT's three nursing homes remain well positioned to respond to the resultant opportunities. As part of its asset enhancement strategy for its properties, the Trust is adding a new 5-storey extension block at The Lentor Residence which is slated for completion in the second half of 2012.

In FY 2011, First REIT acquired a nursing and rehabilitative hospital in South Korea, a country which boasts one of the highest quality healthcare systems in Asia, supported by top-notch medical professionals, facilities and technology. South Korea is also experiencing a rapidly ageing population, which will see strong demand for nursing and rehabilitative services there as well.

Even after its recent acquisitions, First REIT enjoys a relatively low debt-to-property valuation ratio of 16.0%, which is significantly lower than the regulatory limit of 35%. First REIT will therefore have sufficient headroom to pursue further acquisitions to strengthen its property portfolio when the opportunity arises.

Barring any unforeseen circumstances, the Manager does not expect any significant or adverse changes to First REIT's performance in 2012.