1. What is a Real Estate Investment Trust (REIT)?
A real estate investment trust is a listed vehicle that invests in a portfolio of income-generating properties. Rents collected from tenants, after deducting expenses are distributed on a regular basis to provide stable yields to Unitholders.
2. What are the benefits of investing in REITs?
REITs allow investors to consolidate funds for the purpose of investing, generally in real estate and real estate related assets. REITs historically offer investors:
3. What is First REIT?
First REIT is Singapore's first healthcare real estate investment trust (REIT) that invests in a diversified portfolio of income-producing real estate and/or real estate-related assets in Asia that are primarily used for healthcare and/or healthcare-related purposes.
First REIT aims to deliver regular and stable distributions and achieve long-term growth in the net asset value per Unit through growth in rental yields and acquisitions.
4. How can I Invest in First REIT?
To invest in First REIT which is listed on the Singapore Exchange (SGX), an individual must first have a securities account with the Singapore Central Depository (Pte) Ltd.
Opening A Securities Account
You can open only one direct securities account with CDP and any number of sub-accounts with any of the Singapore Exchange - Securities Trading (SGX-ST) Member Companies. If you hold a NRIC issued in Singapore (either pink or blue), you may also approach an Authorised Trading Centre (ATC) personally to apply for a securities account.
You must be at least 21 years old and must not be an undischarged bankrupt. You need to bring along your NRIC / Passport / Re-entry Permit and other relevant supporting documents. There will be a CDP SecuritiesAccount Opening Form that you are required to complete and sign in the presence of an authorised personnel.
Overseas applicants may submit their applications via post. However, application forms and supporting documents must be certified by one of the following:
Where there is any reason to doubt the authenticity of an application, CDP reserves the right to reject the application.
The Central Depository (Pte) Limited
4 Shenton Way #02-01
SGX Centre 2
8.30 am to 5.00 pm (Monday to Friday)
9.00 am to 12.30 pm (Saturday)
Closed on Sundays and Public Holidays
5. Can I use my Central Provident Funds (CPF) to invest in First REIT?
Yes, up to 35% of a member's investible savings in his/her CPF ordinary account.
In addition, CPF members who purchase the units in First REIT within CPF Investment Scheme (CPFIS) and returned the distribution to their CPFIS, will receive distributions in gross amount (without any tax deducted at source).
6. What is the Role of the Sponsor to the REIT?
In the case of Sponsor-backed REITs, the Sponsor provides support to the REIT by injecting its own properties into the initial portfolio of the REIT upon listing. Such REITs are typically granted a right of first refusal to the Sponsor's assets, enabling the REIT to leverage on the Sponsor's strong network and pipeline of assets.
The advantages of having a strong Sponsor are apparent during the financial crisis as Sponsor-backed REITs were better positioned to withstand the difficult times through their Sponsor's support (e.g. rights issue exercises, sourcing for credit).
Right of first refusal of the Sponsor's assets
There is usually a right of first refusal agreement between the REIT and its Sponsor. When the Sponsor wants to sell its property asset, the REIT will be offered the right to purchase the asset first before it is being offered to the market. Usually, the Sponsor has the obligation to ensure that the rental income of the properties is stable before injecting them into the REIT.
Source of equity
When the REIT is raising funds via rights issue, the Sponsors may support the exercise by undertaking to subscribe for their pro-rata entitlement of rights units, and also to subscribe to part or all of the excess rights units. In a way, we can view this as the Sponsor injecting funds directly into the REIT. Sometimes the Sponsor's percentage holding of the REIT may be increased as a result of subscribing to the excess rights. For example, in the case of a rights issue, the Sponsor may provide sub-underwriting. In order for the REIT to grow, the Sponsor may offer suitable assets, subject to the approval of independent Unitholders.
Source of credit
When the REIT is sourcing for credit for acquisition purpose or refinancing of debt, the presence of a strong Sponsor will offer several advantages. The financial institutions may be more willing to lend because of the Sponsor. The REIT may also tap on the existing relationship of the Sponsor with certain financial institutions. As a last resort, the Sponsor may also provide credit to the REIT with its own funds.
7. What is your current asset base and where are your properties located?
As at 31 December 2019, we have a portfolio of 20 properties – 16 in Indonesia, 3 in Singapore and 1 in South Korea, with a total asset value of S$1.34 billion.
8. Is there any intention to expand to other parts of Asia?
We are constantly on the lookout for income-generating healthcare and/or healthcare-related assets in Asia that are in the interests of Unitholders.
If there are such opportunities, we will evaluate potential assets by taking into account, among other things, the cash flows to be generated by the assets, opportunities for future income and capital growth and diversification of the portfolio by geography, asset, and optimisation of risk-adjusted returns to the Unitholders.
9. What is the optimal yield that the company attempts to achieve on its assets?
Although we do not have an optimal yield in mind, we are always on the lookout for yield-accretive assets to add to our existing portfolio. We strive to acquire properties which have at least the same or higher yield than our existing yield. This approach will add value to Unitholders in the long run.
10. Apart from acquisitions, how does First REIT intend to grow its portfolio?
We intend to implement pro-active measures to enhance the returns from the existing and future properties in First REIT's portfolio. For future properties acquired by First REIT and leased out under master leases, we intend to implement pro-active measures to enhance the returns from such properties.
Such measures may include addition and alteration works, including work carried out for the purpose of expanding size and capacity (in relation to future properties to be acquired by First REIT), leveraging and enhancing such properties' competitive strengths to optimise rentals and enhancement projects to maintain the competitive positioning of such properties.
11. How often does First REIT pay out dividends to Unitholders?
First REIT's dividends are paid on a quarterly basis. Our current distribution policy is to distribute at least 90.0% of our tax-exempt income (after deduction of applicable expenses) and capital receipts. However, since our initial public offering in 2006, we have maintained a payout policy of 100% of our distributable income.
12. What is the investment strategy used by the managers of First REIT?
Our principal investment strategy is to invest in income-producing assets, which are primarily used for healthcare and healthcare-related purposes. We aim to harness exclusive investment opportunities in the resilient asset class of healthcare properties in the Asian region to generate attractive and stable returns.
13. What type of Properties does First REIT invest in?
We would like to engage with Property Owners or Owners' Representatives to work out mutually beneficial proposals so that Owners can securitise their real estate with First REIT and in turn realise cash.
A typical asset securitisation structure would be the "Sale and Leaseback Structure" and the types of properties that can be securitised are as follows:
First REIT can invest in leasehold or freehold properties that are in these forms:
14. How to get in touch with us for a preliminary business discussion?
If you own a healthcare or healthcare related property and wish to find out more about the "Sale and Leaseback Structure", please get in touch with us for further discussion.
333 Orchard Road #33-02
Tel: +65 6435 0168
Fax: +65 6435 0167
For more information, please visit our website at www.first-reit.com. Thank you.