First Real Estate Investment Trust (First REIT) has completed the acquisition of Siloam Hospital Manado, Siloam Hospital Makassar and Hotel Aryaduta Manado.
On 21 September 2012, First REIT entered into two conditional sale and purchase agreements for the proposed acquisition of two properties in Makassar and Manado from PT Lippo Karawaci Tbk (“LPKR”), for a total consideration of approximately $142.9 million. This will boost First REIT’s portfolio to span 12 properties across 3 regions, with a total asset size worth $782.2 million.
Siloam Hospitals Manado and Hotel Aryaduta Manado is an 11 storey mixed use development located in Manado, North Sulawesi, Indonesia. Siloam Hospitals Makassar is a hospital located in Makassar City, South Sulawesi, Indonesia. The acquisitions will not only enhance First REIT’s growing portfolio but would also further strengthens its income streams. The increased absolute size of First REIT’s asset base will enhance its overall capital management flexibility, and serve to facilitate future acquisitions.
LPKR, as Master Lessee of the two properties, has signed conditional master lease agreements for lease terms of 15 years, with an option to renew for a further term of 15 years. This is expected to benefit First REIT as it enjoys stability in gross rental income over the next 15 to 30 years. As well, the step-up feature of the base and variable rent components under both master leases are expected to provide locked-in organic growth in First REIT’s cash flow.
Stirling Coleman Capital Limited acted as the Independent Financial Adviser to the Independent Directors and the Trustee in relation to the Interested Party Transactions. Stirling Coleman Capital Limited acted as the IFA for their previous transaction in 2010.