Singapore-listed First REIT is moving ahead with its plan to exit its assets in Indonesia, announcing a S$471.5 million ($367.15 million) divestment plan as part of a broader strategic review.
The proposed transactions, announced on Wednesday (Apr 1), include the sale of hospital and non-core assets at a 2.1% premium to valuation, alongside put options that, the firm says, could unlock an additional S$294.8 million if exercised.
The divestment will be executed in two tranches, with the REIT selling eight hospital assets to PT Siloam International Hospitals Tbk and its subsidiaries for about S$389.2 million, reflecting a 2.8% premium to valuation, as its first tranche.
PT Siloam International Hospitals is backed by CVC Capital Partners. DealStreetAsia had reported in March that CVC has begun preliminary discussions with potential investors to explore a stake sale in the Indonesian hospital operator.
Separately, two non-hospital assets will be divested to PT Lippo Karawaci Tbk for S$53.3 million, while a commercial lease for Lippo Plaza Kupang will be prepaid by a unit of PT Metropolis Propertindo Utama for S$29.1 million.
In parallel, First REIT has secured put options with Siloam covering six remaining hospital assets in Indonesia. If exercised, these would bring in a further S$294.8 million, completing its exit from the market.
The assets being sold include a mix of hospitals, malls, and a hotel, part of a broader effort to exit non-core and underperforming properties, including those with rental arrears.
The firm said proceeds from the divestments will primarily go toward repaying debt, significantly lowering the REIT’s aggregate leverage to 16.7%. This is expected to deliver annual interest cost savings of S$18.8 million.
The manager said it will also fully recover S$6.9 million in outstanding rental arrears tied to its Indonesian assets.
“This transaction eliminates foreign exchange volatility and income drag, while prioritising DPU stability and capital recycling,” said CEO Victor Tan.
Chairman Christopher James Williams added that the move provides “transaction certainty” amid a challenging macro environment in Indonesia.
The divestments mark a decisive shift in strategy, with First REIT planning to redeploy capital into developed markets such as Singapore, Japan, and Australia.
The manager cited more predictable macro conditions, lower cost of debt, stronger tenant profiles, and improved currency stability as key reasons for the pivot.
The proposed divestments will require approval from unitholders at an extraordinary general meeting expected in June 2026. Completion is targeted for August.
