First REIT 1Q 2026: DPU 0.50¢ -13.8% YoY, But The Story Is The Indonesia Exit — Eight Hospitals Sold To Siloam, Three Non-Core Divested, Put Option On The Remaining Six — Six Insights Beyond The Headline

First REIT 1Q 2026 (quarter ended 31 March 2026) delivered Rental and Other Income of S$23.2M (-8.4% YoY), Distributable Amount of S$10.6M (-12.5% YoY), and DPU of 0.50 Singapore cents (-13.8% YoY, -3.8% QoQ) — a print that on its own reads as a difficult quarter. But the quarterly numbers are not the story. The story is the 1 April 2026 announcement, formalised in this deck: First REIT has signed definitive agreements to divest eight hospitals to Siloam for IDR 5.1 trillion (~S$389.2M), three non-core assets to LPKR and an MPU-linked entity for ~S$82.4M, and has received a Put Option — not a Call — from Siloam over the remaining six Indonesia hospitals at IDR 3.9 trillion (~S$294.8M), exercisable to 31 October 2026. Combined potential Indonesia consideration of ~S$766M maps against Indonesia's 74.5% share of 31 March 2026 AUM of S$1.02B. The Strategic Review that began with Siloam's January 2025 non-binding LOI has now produced its resolution: First REIT is exiting Indonesia. The 1Q 2026 numbers are the evidence pack that explains why. Six insights beyond the headline.\n\nFINANCIAL HEADLINES\n\nRental and Other Income S$23.2M (-8.4% YoY); ex-FRS 116, S$22.0M (-6.1%). NPI S$22.5M (-8.3% YoY); ex-FRS 116, S$21.3M (-6.0%). Distributable Amount S$10.6M (-12.5% YoY). DPU 0.50 Singapore cents (-13.8% YoY; -3.8% QoQ vs 4Q 2025 of 0.52¢). Total units entitled to distribution 2,119.2M (+0.8% YoY). AUM S$1.02B across 31 properties (vs S$1.12B / 32 properties a year ago). NAV/unit 24.42¢ (vs 27.37¢ at 1Q 2025; -10.8%). Total Debt S$471.1M. Gearing 44.6% (vs 42.1% at Dec-25; 40.7% at 1Q 2025). All-in cost of debt 3.9% (vs 4.5% at Dec-25; 4.7% at 1Q 2025). Weighted average debt tenor 1.7 years. ICR 4.4x (vs 3.7x at Dec-25). 44.2% debt fixed or hedged. Occupancy 100% across all 31 assets. WALE 9.7 years. Distribution yield 7.8% at 31 March 2026 closing price of 25.5¢; price-to-book 1.04x. Distribution payment 26 June 2026; ex-distribution 7 May 2026.\n\nSIX INSIGHTS BEYOND THE HEADLINE\n\n1. THE FX DRAG IS NOW THE BUSINESS MODEL PROBLEM, NOT A QUARTERLY NOISE:\n\nIn local currency, First REIT's three-market rental book is healthy. Indonesia rental income printed IDR 192.3 billion in 1Q 2026 versus IDR 183.6 billion a year earlier, up 4.7% (excluding the divested Imperial Aryaduta contribution). Japan printed JPY 377.2 million, flat. Singapore printed SGD 1.13 million, up 2.0%. The Indonesia portfolio is not broken on operating evidence — tenants are paying, built-in 4.5% rent step-ups continue to flow, and the three performance-based hospitals are contributing above escalator. The collapse is the translation. SGD/IDR moved from 12,048 average in 1Q 2025 to 13,158 in 1Q 2026 (-9.2%). SGD/JPY moved from 114 to 123 (-7.9%). Investment properties fell from S$1.12B to S$1.02B over the year, and management attributes the decline explicitly to IDR and JPY weakness rather than cap-rate expansion or NOI decline. For a REIT whose revenue is ~75% IDR and ~22% JPY but whose reporting currency is SGD, persistent asymmetric FX weakness does not fade in the reported numbers — it compounds. This is the structural exposure the Transaction Rationale slide lists as reason one for the divestment. The FX drag has moved from a quarterly headwind to a structural argument for leaving the geography.\n\n2. THE DIVESTMENT ARCHITECTURE — EIGHT HOSPITALS, THREE NON-CORE, A PUT ON SIX:\n\nThe 1 April 2026 definitive agreements disclose the Indonesia exit in three parallel tranches. Tranche one: the Proposed Hospital Divestments — eight hospitals (Siloam Sriwijaya, Siloam Hospitals Purwakarta, Lippo Village, Kebon Jeruk, Bali, Kupang, Baubau, and Manado) sold to Siloam for IDR 5.1 trillion, approximately S$389.2M at the 27 March 2026 practicable-date rate of S$1 to IDR 13,157.89. Tranche two: the Proposed Non-Core Divestments — Lippo Plaza Baubau and Hotel Aryaduta Manado to PT Lippo Karawaci for c.IDR 0.7 trillion (~S$53.3M), plus a prepaid lease on Lippo Plaza Kupang with a wholly-owned subsidiary of PT Metropolis Propertindo Utama for c.IDR 382.8 billion (~S$29.1M), combined ~S$82.4M. Combined tranche one + two consideration ~S$471.5M at a 2.1% premium over the average of two independent valuations. Tranche three — and the most structurally interesting disclosure — is the Put Option granted by Siloam over the remaining six Indonesia hospitals at IDR 3.9 trillion (~S$294.8M), with no corresponding call obligation on First REIT. Exercise window: from signing to 31 October 2026, extendable by mutual agreement to 31 December 2026. The asymmetry is explicit and pro-unitholder — First REIT can choose to complete the full Indonesia exit at a pre-agreed price, but Siloam cannot force a transfer. If all three tranches execute, combined Indonesia proceeds reach ~S$766M against 31 March 2026 AUM of S$1.02B, of which Indonesia is disclosed as 74.5% by asset value — a material full-geography restructuring in a single calendar year. Outstanding MPU rental arrears of ~S$6.9M (of which ~S$1.5M was received in January 2026) are to be cleared in full at completion.\n\n3. A 2.1% PREMIUM OVER BOTTOM-OF-CYCLE NAV — BOTH READS ARE VALID:\n\nThe 2.1% premium over the average of two independent valuations is the transaction's most disputed number, and it admits two defensible readings that will anchor unitholder debate through the June EGM. Sympathetic read: a 2.1% premium in April 2026 on Indonesia hospital assets, priced in IDR against a SGD reporting currency at or near record-weak IDR, executed with a tenant-buyer that has operated the assets for almost 20 years, is a favourable outcome. Independent valuations are struck in IDR at current local-market cap rates, not cycle-peak cap rates. A competing process that reached 60-plus parties (disclosed in the FY2025 Annual Report) did not produce a superior offer, which is informative about the absence of natural competing bidders for Indonesia hospital real estate at scale. Skeptical read: NAV/unit has fallen from 27.37¢ at 1Q 2025 to 24.42¢ at 1Q 2026 — a 10.8% decline — and portfolio value is down from S$1.12B to S$1.02B over the same period. Selling the 74.5%-of-AUM Indonesia block against a depressed NAV crystallises permanent capital loss relative to long-run SGD potential, particularly if IDR mean-reverts over three to five years. The 2.1% premium would need to be weighed against distribution streams forgone at 4.5% annual IDR rent escalators on the remaining master-lease tenor. Neither read is unambiguously correct at 1Q 2026 — the deciding variables (realised IDR trajectory, ability to redeploy proceeds accretively, whether the Put is exercised) resolve only over the following four to eight quarters.\n\n4. WHAT IS LEFT AFTER INDONESIA — A NICHE JAPAN + SINGAPORE REIT:\n\nThe end-state portfolio depends on whether the Put is exercised. If First REIT exercises the Put over the remaining six hospitals, the post-completion portfolio reduces to 17 assets — 14 Japanese nursing homes and 3 Singapore nursing homes — with combined AUM of approximately S$260M on 31 December 2025 appraised values (Japan 22.7% of S$1.02B = S$232M; Singapore 2.8% of S$1.02B = S$29M). That would place First REIT among the smallest healthcare-themed S-REITs by AUM, concentrated in two developed-market nursing-home asset classes. The residual lease-expiry profile carries its own watch-item: Precious Homes @ Bukit Merah and Bukit Panjang expire April 2027, Medical Rehabilitation Home Bon Séjour Komaki May 2027, The Lentor Residence June 2027 — four of seventeen leases concentrate into a two-month 2027 window. If the Put is not exercised by 31 October 2026 or the 31 December 2026 extension, the portfolio retains six Indonesia hospitals representing roughly 17-20% of pre-exit AUM, and First REIT holds a materially different forward footprint than the fully-exited case. The Aug 2026 onwards phase of the transaction timeline — labelled in the deck as "Identify, Evaluate and Execute Potential Acquisition Opportunities and Potential Put Option Divestments" — is where the end-state is decided.\n\n5. BALANCE SHEET — GEARING 44.6%, MAY 2027 SECURED, SEPT 2026 STILL OPEN:\n\nAggregate leverage stepped up to 44.6% from 42.1% at 31 December 2025 and 40.7% at 1Q 2025. Absolute total debt is broadly unchanged at S$471.1M (vs S$458.0M at Dec-25; S$465.1M at 1Q 2025) — the ratio increase reflects the shrinking denominator as deposited property contracts with FX weakness, not incremental drawdowns. Two structural moves landed between year-end and 1Q close. First, in March 2026 First REIT secured a 12-month extension of its S$300M term loan and revolving credit facilities, pushing maturity from May 2026 to May 2027 — defusing the single largest refinancing wall of 2026 and reclassifying S$260M+ of debt from current to non-current (hence the large balance-sheet shift: current liabilities S$279.5M → S$32.0M; non-current S$249.0M → S$508.7M). Second, all-in cost of debt improved to 3.9% from 4.5% at Dec-25 and 4.7% at 1Q 2025 — a 110 basis point YoY improvement, lifting ICR to 4.4x from 3.8x a year ago. The S$33.3M of perpetual securities were redeemed in January 2026, removing the distribution-to-perpetuals line and lifting coverage mechanically. Two residual items remain ahead of the closing calendar: the S$13.4M Shinsei Social Loan due September 2026 (Manager disclosed to be in refinancing discussions) and the S$100M CGIF-Guaranteed Social Bond due April 2027. Neither is structurally threatening at current gearing, but the proximity of the September 2026 loan to the 31 October 2026 Put deadline creates a clustered capital calendar through 2H 2026 running against a live transaction timetable.\n\n6. SILOAM IS COUNTERPARTY, TENANT, OPERATOR — THE IPT QUESTION:\n\nSiloam represents 45.6% of 1Q 2026 rental income, up from 44.2% a year earlier. PT Lippo Karawaci contributes 29.3% (down from 31.1%). PT Metropolis Propertindo Utama contributes 6.1%. Combined, the three Lippo-orbit tenants account for ~81% of rental income. In the divestment architecture, Siloam is the buyer of all eight hospitals in tranche one and holds the sole Put right on the remaining six in tranche three. LPKR is the buyer of two non-core properties in tranche two. MPU is the counterparty to the prepaid-lease non-core transaction and to the S$6.9M arrears being cleared as a completion condition. The three largest tenants of the REIT are also the three primary counterparties to its divestment. This concentration is not new — the FY2025 annual report and prior years disclose equivalent interested-person-transaction framing — and First REIT's Sponsor architecture under OUE and OUE Healthcare is independent of the Lippo group, which limits direct governance overlap at the manager level. But the scale of the 1 April 2026 transaction — ~S$766M in combined consideration transferring to counterparties that are also the REIT's largest tenants — means the May 2026 Circular will need to address IPT governance in substantial detail. Independent valuations, the 60-plus-party outreach run by Citi, and the explicit 2.1% premium disclosure are designed to pre-empt these concerns. The EGM vote in June 2026 will be the binding resolution.\n\nVALUATION & CAPITAL MARKETS CONTEXT\n\nFirst REIT closed 31 March 2026 at 25.5 Singapore cents, implying 7.8% distribution yield on annualised DPU and price-to-book of 1.04x. The P/B above 1.0x is notable — most S-REITs of comparable size trade at meaningful NAV discounts — and suggests the market is already pricing in optionality from divestment proceeds. At FY2025 three months ago, disclosed yield was 7.9% and P/B below 1.0x, so the cycle through the 1 April announcement has compressed yield and re-rated P/NAV. Macro backdrop from the Outlook slide: global growth projected at 2.9% for 2026, SGD/IDR at 13,158, and 1 SGD above 125 JPY in April 2026 — both cross-rates the Manager cites as structural drivers of the divestment. Use-of-proceeds is disclosed to include a proposed special distribution (rationale item six), balance-sheet optimisation, and redeployment into developed-market assets with capital discipline — language that reads as pre-EGM framing for a distribution-plus-reinvestment split rather than pure wind-down.\n\nKEY TAKEAWAY\n\nFirst REIT's 1Q 2026 is not a quarter to be read in isolation. It is the backdrop quarter to the largest strategic restructuring in the REIT's 20-year history — an exit from Indonesia that will, if fully executed, leave a Japan-and-Singapore nursing-home portfolio approximately one-quarter the size of today's AUM. Three variables resolve the story over the next two quarters: (1) the June 2026 EGM vote on the Proposed Hospital and Proposed Non-Core Divestments, where the IPT-governance pre-emption in the Circular meets unitholder judgement on the 2.1% premium; (2) the 31 October 2026 Put Option decision, determining whether First REIT becomes a 17-asset developed-markets REIT or a 23-asset three-market REIT with a residual Indonesia stub; and (3) the capital-redeployment framing — whether special distribution, acquisition pipeline, or deleveraging dominates the proceeds. The 1Q 2026 DPU of 0.50 Singapore cents may be the last quarter this portfolio configuration is ever printed.