First REIT mulls divestment of Siloam Hospitals Surabaya for $40.9m

The agreed property value translates to a capital gain of 143.2%

First REIT has proposed to divest Siloam Hospitals Surabaya for an agreed property value of $40.9m (Rp. 430.0b) which translates to a capital gain of 143.2%.

As the property was purchased for $16.8m (Rp. 176.8b), the agreed property value translates to a capital gain of 143.2% for First REIT.

The REIT has shares in the hospital through the direct wholly-owned subsidiaries of its trustee, Perpetual (Asia) Limited, namely Primerich Investments Pte. Ltd. and Surabaya Hospitals Investment Pte. Ltd.

The REIT's manager said net proceeds from the divestment may be used to repay debt, finance any capital expenditure and asset enhancement works and/or general corporate and working requirements, and distribute as capital gains.

“The Proposed Divestment is a strategic and timely opportunity to realise capital appreciation of SHS. Moreover, it aligns with First REIT 2.0 Growth Strategy and the Trust will be well-placed to ride on its growth trajectory,” said Victor Tan, Executive Director and CEO of the First REIT's Manager, First REIT Management Limited.

Following the divestment, the weighted average age of property computed on a GFA basis for the portfolio of First REIT will also improve from 16.2 years to 15.7 years as of 31 December 2021, and on a pro forma basis, including the Japan Nursing Homes