• 2H25/FY25 DPU of 1.04/2.17 Singapore cents (-10.3%/-8.1% YoY) was in line with expectations, forming 48%/100% of our FY25e forecast. The YoY decline was due to the depreciation of the IDR and JPY against the SGD, partially offset by higher local-currency rental income and lower finance costs.
• The divestment of the non-core Imperial Aryaduta Hotel & Country Club (IAHCC) was completed on 4 Dec 2025. Following the redemption of S$33.3mn of 4.9817% subordinated securities in Jan 2026, FIRT no longer has any perpetual securities outstanding. Excluding the IAHCC divestment, portfolio valuations declined 6.2% YoY, mainly due to depreciation in IDR and JPY.
• We maintain ACCUMULATE with a lower DDM-derived target price of S$0.29 (prev. S$0.31) as we roll forward our forecasts. FY26e/27e DPU estimates are reduced by 5%/8% to reflect weaker IDR, JPY, and the divestment of IAHCC. The strategic review of Siloam's intent to acquire FIRT’s Indonesian hospital assets is still ongoing, with no material updates to date. In the meantime, FIRT continues to benefit from the base 4.5% rental escalation across its Indonesia portfolio, as more Indonesian hospitals transition to performance-based rent (currently three). FIRT trades at an FY26e DPU yield of 8.4%.

The Positives
+ Stable operating performance in local currency terms. FY25 income from Indonesia and
Singapore properties rose by 5.1% and 2.0%, respectively, in local currency terms, while
Japan remained stable.

+ Stable capital management. The cost of debt declined by 50bps YoY to 4.5%, while gearing
and ICR remained healthy at 42.1% and 3.7x, respectively. FIRT is in discussions to extend
and refinance S$260mn of loans due in 2026. We expect FY26e all-in cost of debt to remain
around 4.5%, with 46.1% of debt on fixed rates.

The Negative

- Rentals continue to be owed by MPU, with S$6.9mn outstanding as at 31 Dec 2025.
S$1.5mn was received in Jan 2026, reducing the amount owed to S$5.4mn.
- Decline in portfolio valuations. On a same-store basis, valuations fell 6.2%, primarily due
to FX headwinds. In local currency terms, the Indonesia portfolio rose 1.4% on higher rents,
while the Japan portfolio declined 0.7%. The Singapore portfolio declined by 5.8% due to
decreasing land tenure.

• 3Q25/9M25 DPU of 0.52/1.65 Singapore cents (-10.3%/-7.3 YoY) was slightly below our estimates, forming 23%/73% of our FY25e forecast. The YoY decline in DPU was due to depreciation of the IDR and JPY against the SGD, partially offset by higher rental income in local currency terms.
• Rental income for 9M25 from Indonesia and Singapore grew 5.5% and 2% respectively in local currency terms, while Japan remained stable. On 17 October, FIRT announced the proposed divestment of Imperial Aryaduta Hotel & Country Club (IAHCC) for Rp.322.2bn (S$25.9mn), representing a 22% premium over its original purchase price and 0.65% above the latest valuation.
• We downgrade from BUY to ACCUMULATE with an unchanged DDM-derived target price of S$0.31 due to the recent share price performance. FY25e/26e DPU estimates are trimmed by 4%/2% to reflect the weaker Indonesian Rupiah and Japanese Yen. The strategic review of Siloam's letter of intent (LOI) to acquire FIRT’s Indonesian hospital assets remains ongoing, with no material updates as of 3Q25. In the meantime, organic growth will be driven by more Indonesian hospitals transitioning to performance-based rent (currently three). FIRT trades at an FY25e DPU yield of 7.8%.

• 2Q25/1H25 DPU of 0.55/1.13 Singapore cents (-8.3%/-5.8 YoY) was slightly below our estimates, forming 23%/48% of our FY25e forecast. The YoY decline in DPU was due to the depreciation of the IDR and JPY against the SGD, partially offset by higher rental income in local currency terms.
• Rental income from Indonesia and Singapore rose 5.5% and 2% respectively in local currency terms, while income from Japan remained stable. As of 30 June 2025, overdue rent from PT MPU stood at S$7.0mn (1Q25: S$5.8mn), with S$0.9mn received in July 2025.
• Maintain BUY with a lower DDM-derived target price of S$0.31 (prev. S$0.32). We trim our FY25e/26e DPU estimates by 3%/1% due to ongoing FX headwinds, particularly the weaker Rupiah. Despite this, FIRT offers an attractive FY25e DPU yield of 8.4%. It is undergoing a strategic review in response to Siloam's letter of intent (LOI) to acquire its Indonesian hospital assets, with no material updates as of 2Q25. In the meantime, organic growth will be driven by more Indonesian hospitals transitioning to performance-based rent from the current three.

- 1Q25 DPU of 0.58 Singapore cents (-3.3% YoY) was slightly below our estimates, forming 23% of our FY25e forecast. The YoY decline in DPU was due to the depreciation of the IDR and JPY against the SGD, partially offset by higher rental income in local currency terms. 1Q25 DPU of 0.58 cents was unchanged QoQ.

- With 56.7% of its debt hedged to fixed rates, FIRT benefited from lower interest rates, bringing its all-in cost of debt down to 4.7% (Dec 24: 5.0%). After receiving S$2.4mn from MPU in 4Q24, no payments were made in 1Q25, bringing the total overdue rent to S$5.8mn as of 31 March 2025.

- Maintain BUY with an unchanged DDM-derived target price of S$0.32. We trim our FY25e/26e DPU estimates by 6%/4% to reflect ongoing FX headwinds. Despite this, FIRT is still trading at an attractive FY25e DPU yield of 9.2%. FIRT is undergoing a strategic review to assess Siloam's letter of intent (LOI) to acquire its hospital assets in Indonesia, with no material developments as of 1Q25. Organic growth will come from more Indonesian hospitals achieving performance-based rent.

•  4Q24/FY24 DPU of 0.58/2.36 Singapore cents (-6.5%/-4.8% YoY) was in line with our estimates, forming 25%/100% of our FY24e forecast. The YoY decline in DPU was due to the depreciation of the IDR and JPY against the SGD, partially offset by higher rental income in local currency terms. 4Q24 DPU of 0.58 cents was unchanged QoQ.
•  Revenue growth for Indonesian properties in local currency terms improved in 4Q24 to 5.5% YoY (9M24: +4.4%), driven by higher performance-based rents. MPU made some payments in 4Q24 but still owes S$4.6mn as of 31 December 2024.
•  Maintain BUY with a higher DDM-derived target price of S$0.32 (prev. S$0.30) as we roll forward our forecasts. Our estimates remain unchanged. First REIT is trading at an attractive forward FY25e distribution yield of 9.2%. Organic growth will come from more Indonesian hospitals achieving performance-based rent. FIRT is conducting a strategic review to assess Siloam's letter of intent (LOI) to acquire its hospital assets in Indonesia and to evaluate all options, aiming to deliver long-term value for unitholders.

•  FIRT received a preliminary non-binding letter of intent (LOI) from PT Siloam International Hospitals Tbk (Siloam) to acquire FIRT’s portfolio of 14 Indonesian hospitals (72% of AUM). We view this positively as (i) Siloam’s interest in the assets supports the inherent value of the Indonesian hospitals, (ii) the proceeds from the sale could provide FIRT with more financial capacity for future acquisitions in developed markets such as Australia and Japan, and (iii) the sale could unlock considerable value for unitholders. Siloam is the current tenant and operator of the hospitals and is 65% owned and controlled by CVC Capital Partners.
• FIRT’s NAV per share of 29.16 cents is reinforced by Siloam’s interest as a buyer. Also, we expect any sale of the Indonesian hospitals to be above valuations in order to gain shareholder approval.
•  Maintain BUY with an unchanged DDM-derived target price of S$0.30. FIRT is undergoing a strategic review to evaluate all options and deliver sustainable long-term value for its unitholders. There is also no certainty that any transaction will materialise from the strategic review or LOI. As this LOI is in its preliminary stage, there is no change to our estimates. FIRT is trading at an attractive forward FY24e/25e distribution yield of 8.9%/9.5%.

• 3Q24/9M24 DPU of 0.58/1.78 Singapore cents (-6.5%/-4.3% YoY) was in line with our estimates, forming 25%/75% of our FY24e forecast. The drop in DPU was due to the depreciation of the IDR and JPY against the SGD. 3Q24 DPU was 3.3% lower than the two preceding quarters of 0.60 cents per quarter.
• Revenue growth in local currency terms remained stable in 3Q24, with a YoY increase of 4.4% for properties in Indonesia, 2% for nursing homes in Singapore, and flat performance in Japan. Rentals outstanding from MPU amounted to S$7.9mn as of 3Q24.
• Maintain BUY with an unchanged DDM-derived target price of S$0.30. Our estimates remain unchanged. First REIT is trading at an attractive forward FY24e distribution yield of 8.9%. Organic growth will come from more Indonesian hospitals achieving performance-based rent. Potential catalysts include the divestment of non-core assets, such as Imperial Aryaduta Hotel and Country Club (IAHCC), and the reinvestment of proceeds to fund acquisitions in developed markets as part of the First REIT 2.0 growth strategy aimed at achieving over 50% of AUM in developed markets by FY27.

• 1H24 DPU of 1.20 Singapore cents (-3.2% YoY) was in line with our expectations, forming 51% of our FY24e forecast. 1H24 DPU was lower YoY mainly due to the stronger SGD against the IDR and JPY. 2Q24 DPU was stable QoQ at 0.60 Singapore cents.

• 1H24 revenue in local currency terms grew 4.4% YoY for properties in Indonesia, 2% YoY for nursing homes in Singapore, and remained stable in Japan. Finance costs grew marginally by 0.8% (S$0.1mn) YoY due to good interest rate risk and currency risk management.

• Maintain BUY with an unchanged DDM-derived target price of S$0.30. First REIT is trading at an attractive 16% discount to NAV and a forward FY24e distribution yield of 9.3%.  Organic growth will stem from more Indonesian hospitals achieving performance-based rent. Potential catalysts include the successful divestment of non-core assets such as Imperial Aryaduta Hotel and Country Club (IAHCC) and recycling the proceeds to fund acquisitions in developed markets as part of its First REIT 2.0 growth strategy. Our estimates remained unchanged.

• Indonesian hospital assets enjoy a long WALE of 11 years with a minimum annual rental escalation of 4.5% or a performance-based rent. FY23 rental income from Indonesia grew 7.6% in local terms, due to strong hospital revenue and performance rents.
• Capitalising on Japan’s aging population by expanding into Japan in 1Q22 by acquiring 12 nursing homes from its sponsor OUEH and a further 2 in 3Q22 from a third party. Targeting to increase the portfolio in developed markets to more than 50% of AUM by 2027, while simultaneously reducing exposure to Indonesia as a percentage of total income.
• First REIT is trading at an attractive 20% discount to NAV and a forward FY24e distribution yield of 9.6%.  We initiate coverage with a BUY recommendation on First REIT with a DDM-derived target price of S$0.30.

Company Background
First REIT (FIRT) is Singapore’s first healthcare REIT focused on investing in income-producing real estate assets primarily used for healthcare-related purposes. Its S$1.14bn portfolio consists of 32 properties comprising 15 in Indonesia (74.5% of assets under management), 14 in Japan (22.7%), and 3 in Singapore (2.8%). FIRT’s sponsors are OUE Limited and OUE Healthcare Limited (OUEH). FIRT has the right-of-first-refusal (ROFR) from OUEH, and a ROFR for a pipeline of hospitals from Lippo Karawachi (LPKR), a majority shareholder of Siloam. Siloam International Hospitals (38.7%) and LPKR (34.9%) are major tenants.

Key Investment Merits
• Restructured MLA and a long portfolio WALE of 11.3 years ensure long term cash flow visibility. The new MLA includes a minimum annual rental escalation of 4.5% or a performance-based rent of 8% of the hospital’s Gross Operating Revenue (GOR) from the preceding financial year, denominated in IDR, for the Indonesian hospitals. Currently, 3 of the 14 hospitals are already paying performance-based rent, and more may start contributing as the operational performance of the hospitals improves. Furthermore,
with Siloam added as a party to the new Tripartite MLAs, the exposure to LPKR will decrease from c.88% before the restructuring to 18.7%, assuming that rentals for each of the Tripartite MLAs beyond 2026 are calculated based on the performance-based rent. LPKR has been experiencing tight cash flow since FY19.
• Recycling capital to fund expansion plans. FIRT plans to divest some of its non-core and mature assets to fund its expansion plans. Currently, Imperial Aryaduta Hotel and Country Club (IAHCC) has been identified as a non-core asset and is being marketed for
divestment. The manager is also exploring divesting into some of the older nursing homes in Japan to recycle the proceeds and buy newer, better nursing homes in Japan. FIRT is also open to divesting some of its mature Indonesian hospitals, if the conditions are right.
• Expansion into developed markets. After expanding into Japan in FY22, FIRT plans to diversify further into developed markets, with a target of having >50% of AUM in developed markets by FY27. This could be done through further acquisitions in Japan or
Australia. This will help reduce exposure to Indonesia and the depreciating Indonesian Rupiah against the strong Singapore Dollar.

We initiate coverage on First REIT with a BUY rating and a DDM-derived target price of S$0.30, based on a COE of 10.5% and a terminal growth rate of 2%. We forecast a DPU of 2.36 cents for FY24e and 2.51 cents for FY25e, translating into a forward yield of 9.6% and 10.3%, respectively.

• We visited First REIT’s four hospitals in Jakarta operated by Indonesia-listed Siloam International Hospitals [Rp2,270, Not Rated]. The hospitals were bustling with activity, well equipped, nicely furbished and offered advanced specialist care including neurology, oncology, gastropathy, urology and fertility.
• Indonesia faces an acute shortage of specialists. Specialists are drawn to modern healthcare equipment and patients. Investing early in private hospitals allowed Siloam to establish a reputation and location that draws patients. It has around 20 hospitals that are a decade old. With the patient flow, it can invest in more sophisticated equipment, which in turn attracts more specialists and patients. A perpetuating loop of specialists, equipment and patients is created.
• First REIT collects rent from Indonesia hospitals in rupiah from the higher of 4.5% annual or performance rent which is 8% of gross operating revenue in the preceding year. In FY23, rental growth in rupiah terms rose 7.6%, of which three hospitals were at performance rent. Rental income from Indonesia could grow faster in FY24 as Siloam revenue expands 18% YoY in 9M23. The four macro drivers for healthcare demand are the growing population, the rising rate of chronic diseases, expanding middle income and the spread of health insurance.

Company Background

First REIT (FIRT) is Singapore’s first healthcare REIT that focuses on investing in income-producing real estate assets that are primarily used for healthcare-related purposes. Its S$1.14bn portfolio consists of 32 properties comprising 15 in Indonesia (74% of assets under management), 14 in Japan (23%), and 3 in Singapore (3%). FIRT’s sponsors are OUE Limited and OUE Lippo Healthcare Limited (OUELH). FIRT has the right-of-first-refusal (ROFR) from OUELH, and a ROFR to a pipeline of hospitals from Lippo Karawachi (LPKR), a majority shareholder of Siloam. Siloam International Hospitals (39%) and LPKR (35%) are major tenants.

VISIT HIGHLIGHTS

Day 1 – 18Mar24: Siloam International / Siloam Hospital Simatupang / Mochtar Riady Comprehensive Cancer

• PT Siloam International Hospitals Tbk (Figures 1 and 2)

Siloam operates 41 hospitals and 3,800 operational beds across Indonesia, serviced by 3,600 plus general practitioners, specialists, and dentists. It has around 9% market share in the private hospital sector. Siloam started investing in private hospitals in 1996. But only ramped up its expansion in 2011.  The general practitioners are employees of Siloam. Other doctors collect 100% of the consultation fees in outpatient and inpatient treatment. In general, 20-35% of hospital bills go to the doctor. The annual price increase ranges from 3 to 4%. Rental is 6% to 6.5% of revenue. The new law for foreign doctors to practise in Indonesia, it will require several years. The new government needs to be set up and implementation law passed.

• Siloam Hospitals TB Simatupang (Figures 3 to 6): Established in 2013, it is a 26-storey 100 operational bed hospital. Centers of excellence include Cardiology, Neuroscience, and Oncology. It is the largest hospital in South Jakarta. We visited the basement floor used for chemotherapy and oncology. The equipment we saw included a linear acceleration machine (LINAC) by Varian used in the treatment of cancer. High-energy beams are used to destroy cancer cells. It was a general hospital that included many other services including health screening, orthopaedics, paediatrics, pulmonology, dental, psychiatry and emergency.

• Mochtar Riady Comprehensive Cancer Centre (Figures 7 to 10): Established in 2010, this hospital in Central Jakarta specialises in Gastroenterology and Oncology. It treats multiple forms of cancer, including liver, pancreatic, breast, stomach, blood, lung, and bone. There are four PET CT scans (imaging tests of organs and tissue) in Indonesia, two of which are located in this hospital.

Day 2 – 19Mar24: Siloam Hospitals Kebon Jeruk / Siloam Hospitals Lippo Village

• Siloam Hospitals Kebon Jeruk (Figures 11 to 14): Established in 1991, it is the oldest private hospital in West Jakarta and is surrounded by a large residential population. It is the hub in Orthopaedic, Urology, Cardiology and Radiology for the Siloam network of hospitals. There are around 200 specialists and sub-specialists. It no longer takes in National Health Insurance (BPJS) patients since 2020. In our discussion with management, raising prices is not the focus, it is raising the level of complex and advanced treatments and procedures. When the pandemic occurred, and patients could not travel abroad for treatment, it was a “golden period” for Siloam to showcase the quality and sophistication of their services.
• Siloam Hospitals Lippo Village (Figure 15 to 18): Established in 1995, it is one of the largest hospitals in the region with a 274-bed capacity. It was the busiest hospital that we visited. There is a waitlist for the hospital beds. The hospital attracts patients outside Jakarta, which can account for 20-30% of advanced cases. The hospital can provide 600 surgeries per month with 1,000 outpatients on weekends. It is housed by around 200 specialists and sub-specialists, of which 30% are visiting specialists. Specialists in Indonesia are allowed to practise in three hospitals. Resident specialists will enjoy higher fees and better premises.