First Reit price drop 19% over the last 3 days. If FR is 5% of your portfolio, what would you do?
May I know what is your inital reason when you invest in First REITs?
Thanks for sharing
I think most investor viewed FR as low risk becuase they are in the medical business which is reslient and on top of that their tenant pay them in Singapore dollar.
The issue of the company is that the agreement of paying Singapore dollar is going to expire soon in the next few years and the rupiah had depreciated against Singapore Dollar by a huge percentage. Hence, based on this fact the investment risk of FR had actually increased significantly which may be different from your initial reason of investment already.
I was a previous owner of this REIT as well (since IPO). Earlier years, I am of the impression that the Hospitals are paying rental to the REIT, which in turn, pays the investors.
Thanks to the team’s earlier article on the AGM, ie, about LK footing bulk of the payment and have not asked for Restructuring. I took action and was able to exit around $1.30.
When source of repayment changes, it’s time to revisit if it still makes sense to continue this position.
Hi Chor Loo,
I think the issue is whether Lippo are willing to foot the SGD 70 million difference in rental if the rental renewal will to happen in the next 2 years. My personally opinion is that Lippo will probably will not match the difference hence the risk in First REITs is significant higher.
I divested half of my shareholdings. Based on what I know, LK is subsidizing 80% of the rental. According to the CFO, this model is not sustainable. Also, FR’s receivables has been increasing and this is due to LK paying FR slightly late compared to the past where LK will pay FR 2 to 3 months in advance.
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