ANNOUNCEMENT - MOU FOR ACQUISITION AND LEASEBACK OF THE LENTOR RESIDENCE 

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11-Apr-2007

FIRST REIT COMPLETES THE ACQUISITION OF 6 LENGKOK BAHRU AND 21 SENJA ROAD FOR S$23.3 MILLION

Further to the announcements made on 22 January 2007, the Board of Directors of Bowsprit Capital Corporation Limited, as manager of First Real Estate Investment Trust ("First REIT"), is pleased to announce the completion of the acquisition of No. 6 Lengkok Bahru, Singapore 159051 ("Lengkok") and No. 21 Senja Road, Singapore 677736 ("Senja") today for the purchase considerations of S$11.8 million and S$11.5 million respectively.

HSBC Institutional Trust Services (Singapore) Limited, as trustee of First REIT ("Trustee"), has today exercised the call options under the put and call option agreements ("Option Agreements"), both dated 22 January 2007, entered into with Pacific Healthcare Nursing Home Pte. Ltd. and Pacific Eldercare and Nursing Pte. Ltd. in connection with the sale and purchase of Lengkok and Senja respectively.

Pursuant to the exercise of the call options by the Trustee, the parties are deemed to have entered into the purchase agreements in respect of Lengkok and Senja in the form as appended to the Option Agreements.

The purchase price and other acquisition costs of Lengkok and Senja are funded by debt.

-- Edited by KK at 20:50, 2007-04-11

26 Feb 2007

Initiating with a Buy rating, PO of S$0.88/share
We are initiating coverage on First REIT with a Buy rating and a 12-month price objective of S$0.88/share, which implies a total return of 25%. Our price objective is based on a 5% premium to our DCF valuation, which is calculated using a discount rate of 11.3%. Further upside could come from acquisition growth.

Healthcare focus
First REIT is the only Singapore REIT (S-REIT) focusing on the Asian healthcare industry. We are positive on the outlook for the Asian healthcare industry. The strong fundamentals reflect rising disposable income, growth in elective surgeries, rising new investment, and the need for REITs to assist industry growth.

Strong acquisition pipeline
We believe First REIT is in a strong position to double its IPO investment portfolio from S$257mn to over S$500mn in the next three years. First REIT has a conservative gearing level, and can benefit from sponsor Lippo Karawaci’s regional contacts in the healthcare industry.

Investment risks
A sustained downturn in hospital operations, which may reduce the ability of Lippo Karawaci (87% tenant) to pay rental commitments to First REIT. Any deterioration in the Indonesian economic environment may also restrict the ability of special purpose companies domiciled in Indonesia to repatriate funds to Singapore.

BT, January 25, 2007, 3.17 pm (Singapore time)

First Reit in talks for China buys

SINGAPORE - Singapore-listed First Real Estate Investment Trust (Reit) is in talks over potential acquisitions in China and may borrow up to $50 million (US$33 million) from banks to expand outside Indonesia and Singapore.

'We are talking to three or four parties. We hope (to buy) in Shanghai because the profiling and branding would be right,' Ronnie Tan, First Reit chief executive officer, said on Thursday. Earlier this week, First Reit - part of the business empire of Indonesia's Riady family - agreed to buy three assets from healthcare provider Pacific Healthcare Holdings for $38.2 million. Mr Tan said the next likely acquisition would be a hospital in Indonesia, that would probably cost less than $30 million.

The trust, which is based on healthcare assets such as hospitals spun off by Indonesia's Lippo Karawaci, wants to borrow to fund its expansion, raising its debt gearing level to about 35 per cent from 17 per cent.

The smallest of Singapore's 15 listed Reits with a market capitalisation of $212 million, currently has a $90 million credit line. -- REUTERS

First REIT to acquire two nursing homes, hospital from Pacific Healthcare

SINGAPORE : First REIT is making its first acquisitions since its listing on the Singapore Exchange in December.

The property trust announced on Monday that it was acquiring two nursing homes and a hospital in Singapore for S$38.2 million.

It is buying over the properties from Singapore-listed Pacific Healthcare.

The move will help First REIT diversify its income geographically and reduce its reliance on any single country.

They will be accretive to First REIT's distribution per unit by 0.193 cents annually.

First REIT's initial assets include three Indonesian hospitals and a hotel managed by Lippo Karawaci. - CNA/ms

Extracted from DMG

First Reit (FIRT SP: S$0.74) BUY (Initiate)

First mover advantage

First Reit offers an attractive value proposition: high base yield of 8.8%
(net of tax), backed by rental income from long 15-year leases from 3
hospitals and 1 hotel in Indonesia. Favourable lease structures with
inbuilt yearly rental escalation plus percentage of turnover clauses will
ensure organic growth of 2-3% annually. Forex volatility is eliminated as
rental proceeds are received in Singapore dollars. Being the first listed
healthcare reit in Singapore, it has first mover advantage to draw on the
growing private healthcare market in Indonesia. Potential for significant
earnings enhancement via acquisitions is underscored by a strong
unleveraged balance sheet on listing. Furthermore, access to the efficient
Singapore capital market would enable it to tap healthcare real estate
investment opportunities around the region. Assuming a target 35% gearing,
First has headroom to fund an estimated $120-130m of new buys through debt.
Acquisition pipeline is healthy, with 3 MOUs in the bag. These are located
in Singapore and Indonesia, providing geographic diversification and
lowering perceived sole sponsor dependency risk. Our DDM-backed price
target of $0.87, based on expanding portfolio size to about $340m over the
next 12 months, translates to a total return upside of 26%. Recommend Buy.


First healthcare reit

· First Reit (First) is the first listed Singapore reit that gives
exposure to the Indonesian healthcare market. First’s portfolio comprises 3
hospitals and a hotel, totalling 525 beds and 190 hotel rooms, valued at
$257m. These properties, with a total 774868sf of GFA, are spread over 32
plots of land in Tangerang, West Jakarta and Surabaya. The land parcels
have “Right To Build” (Hak Guna) titles, equivalent to international
leasehold standards.

· First has acquired the 4 properties at a 20% discount to book NAV of
$0.89 from sponsor, Lippo Karawaci through an issue of 271.4m units at
$0.71 apiece. The largest asset in terms of value would be Siloam
Gleneagles Lippo Karawaci, accounting for just over half of portfolio value
and 49% of income.

· Under the terms of the agreement, Lippo Karawaci will leaseback all
the properties from First Reit for 15 years on a base rent plus annual step
up rental and percentage of turnover clauses, with an option to renew for
another 15 years.

· Forex volatility is mitigated as rental proceeds are received in
Singapore dollars based on a pre-determined forex rate of 5623.5 Indonesian
rupiah per Singapore dollar for the life of the tenancy.

· First has the highest distribution income to revenue ratio amongst
S-reits of 72% as rents are received on a triple net plus basis ie after
deducting all operating costs including maintenance, insurance and taxes.
In addition, during the first two years of tenancy, Lippo Karawaci would
bear all replacement and repair costs. First would be responsible for
structural, mechanical and electrical equipment from the third year of
lease.

Reit structure with a difference

· First has a slightly different reit structure from other S-reits to
enable cash traps such as depreciation to be released within the structure.
There are two sets of special purpose vehicles (SPVs) to own the assets.
The Indonesian SPVs own the assets while the Singapore SPVs are established
to own the Indonesian SPVs.

Base income with inbuilt growth engine

· First has projected after-tax DPU of 1.53cts for the 3 months ended
Dec 2006 and 6.5cts in FY07. This is based on a pro-rated floor rent of $6m
in FY06 and $24.1m in FY07. The variable rental component would kick in
only after the first year of listing. The above DPU estimates translates to
an annualized FY06 and FY07 yield of 8.3% and 8.8%, the highest amongst
S-reits.

· Favourable lease structures provide a long term 2-3% annual organic
growth. This is via a yearly rental escalation clause of 2x Singapore CPI,
subject to a floor of 0% and a cap of 2%. In addition, there is a variable
income component which is a function of the revenue growth of the hospital
and hotel operations.

· First’s certainty of rental income stream is backed by strong
cashflow from the hospital and hotel operations, which is more than
sufficient to pay for rents. The carved out performance of the hospital and
hotel operations had generated EBITDA of $24.1m in 2005. Annualizing 1H06
numbers of $15.7m would give 2006 EBITDA of $31.4m, significantly above the
base rent level.

Favourable industry and market trends

· First reit will benefit as an early mover in the Asian healthcare
reit sector. It will gain from the rising private healthcare expenditure in
Indonesia. It will also have access to the efficient Singapore capital
market to leverage on the growing healthcare real estate investment
opportunities in Indonesia as well as around the region.

Lagging healthcare spending
· The Indonesia healthcare sector has grown strongly over the past 2-3
years, boosted by strong economic growth and rising affluence. Between 2003
and 2005, total healthcare spending increased an average 7.9% annually to
US$7.3b in 2005. In per capita terms, healthcare expenditure rose to US$31,
but still lags its Asean counterparts such as Malaysia (US$167), Singapore
(US$416) and Thailand (US$141). Looking ahead, industry consultants
estimate total healthcare expenditure in Indonesia to expand to US$9.1b by
2008 or an average 8.2% a year over the next 3 years.

· Apart from the rising healthcare spending trend, revenue growth at
the sponsor’s hospital operations are anticipated to grow at a
better-than-industry-average rates due to its well established centres of
excellence such as neuroscience, cardiology, urology, O&G and
gastroenterology, specialities areas which are highly sought after.

Expanding healthcare infrastructure
· Another factor in First’s favour is the trend of aging population in
the region. The increasing need for more infrastructure to cater for home
based long term care would likely provide First with real estate investment
opportunities in this sector. The percentage of population aged 65 years in
Indonesia, Singapore, China, Malaysia, Thailand and Hong Kong is
anticipated to increase by an average 30% by 2015.

Local and regional acquisition focus to drive growth

· Another driver to DPU growth would be acquisition pipeline. First’s
mandate allows the group to purchase healthcare related assets including
hospitals, nursing homes and aged care facilities. Countries within its
radar include Indonesia, Singapore, China, Malaysia, Thailand and Hong
Kong.

· First has signed MOUs to purchase 3 properties from Pacific
Healthcare Group and a hospital in Medan. Earnings accretion from these
purchases should likely be significant as First can leverage on debt to
finance these purchases.

· First has a strong balance sheet with no gearing upon listing. Under
Singapore guidelines, S-reits can leverage up to 35% of asset value without
obtaining a credit rating and up to 65% ceiling with a credit ranking from
a rating agency. In Singapore, the wide gap between estimated NPI yield of
7-7.5% and cost of funds of 4.5%, or 250-300bps spread should translate
into significant earnings accretion. Based on an $80-120m pipeline and
blended NPI yield of 7.4-8%, we estimate that FY07 DPU can be boosted by
2.8-7.5%.

· The sponsor could provide another source for acquisitions. Currently
Lippo Karawaci holds pole position in terms of private bed share with a
total of 735 beds capacity in 4 hospitals, 3 of which have been sold to
First. Within its stable, there is another hospital in Cikarang. In the
longer run, there are plans to build a new 250-bed hospital in Jakarta
together with a new National Tumour Centre. These could potentially form an
acquisition source for First.

Potential concerns

· The key risk to First is its present sole dependency on sponsor Lippo
Karawaci for income stream. However, we view this risk as low given that
the reliance would be gradually reduced with diversification through new
acquisitions of third party assets. Moreover, Lippo Karawaci’s current
operations are profitable with a consolidated net earnings of S$29.1m for
1H06 and gearing at 55%.

Valuation and recommendation

· The only other Asian reit that owns hospital assets is the Al-Aqar
KPJ Reit listed in Malaysia. It owns 1.7msf GFA portfolio of hospital
assets in Malaysia, worth RM461.3m. The stock trades at 1x P/Book NAV and
at FY07 estimated yield of 7.6% based on prospectus forecast, 310bps above
the Malaysian 10-year government bond yield.

· In terms of yield comparison, First is trading at FY07 yield of 8.8%,
exceeding the range of existing S-reit yields of 2.4-7.8%. Pacific Shipping
Trust, also with a sale and leaseback agreement, is trading at 9.4% FY07
yield. However, we believe, First should trade above the latter given its
exposure to the underlying real estate.

· Our price target of $0.87 based on dividend discount method, is based
on expanding portfolio size to about $340m over the next 12 months. This
translates to a potential absolute return of 26%. Recommend buy.

BT, Published November 23, 2006

Pricing of Lippo Reit said to be delayed

THE pricing of Lippo Group's Singapore property trust, which was due to take place yesterday, has been postponed until Monday as certain regulatory issues need to be resolved, sources close to the deal said.

Indonesian conglomerate Lippo wants to raise as much as $111 million from the sale of units in First Reit, which is backed by a group of Indonesian property assets - a first for a Singapore real estate investment trust. 'The delay is technical,' one source close to the deal said, adding that the company has to complete some formalities before it can submit its final document to the Monetary Authority of Singapore. On Tuesday, another source had said that the order book for the initial public offering was five times covered and that the deal would be priced yesterday.

Jakarta-listed Lippo Karawaci, one of the real-estate arms of Lippo Group, is selling 140.4 million units for First Reit at between $0.68 and $0.79 per unit. The Reit is based on three hospitals and a hotel resort worth $257 million. Merrill Lynch and OCBC are joint lead managers for the deal. - Reuters