What do you guys think of First REIT?

What status 2024?

There is two major things to note:

1. Upcoming leases renewal
   Their Contract with the hospital is 15 Years + 15 Years. A few of their hospitals are near the first 15 years in 2 years time. If they couldn't agree on the term, then it will be a potential drop in rental income, and hence hurt the distributions returns.

The reason for the worriness is because of the 2nd point.

2. Rental Collections from Hospitals

Their Account Receivables have been piling up. The reason being is the hospital aren't paying as punctual. The reason being is the payment isn't from the hospitals directly, but from their sponsors, which is Lippo Karawaci. And recently, Lippo Karawaci runs into cash flow issues. Hence, there are worries that this would affect First REITs further.

Hence, even though at current, it seems like their NPI and DPU looks OK. Due to the reason above, any changes on their sponsors, hospitals, and renewal of leases would affect the return of the REITs.