First REIT is going to restructure Master Lease Agreements of its Indonesian Hospital Assets. Earlier this year in June 2020, I wrote about the opportunity to buy into First REIT given the high attractive yield of 11.62%.
However, with such a high yield, there can be potentially high risks involved such as the debt profile of its sponsor Lippo Karawaci. The sponsor’s escalating debt caused First REIT’s share price to fell in 2018.
On 1 June 2020, PT Lippo Karawaci Tbk (“LPKR”) unilaterally announced its intention to restructure all of the Master Lease Agreements which LPKR had entered into with First REIT for the LPKR Hospitals (the “LPKR MLAs”). Subsequently in September 2020, the Manager of First REIT received a non-binding rental restructuring proposal from LPKR.
As you can see from the chart below, the share price of First REIT went on a downtrend....
