FirstReit 2QFY2016

Revenue                             = $26.6m
NPI                                    = $26.3m
Distributable Income         = $16.2m
DPU                                   = 2.11 cents (2QFY2015 2.07 cents)
Total Debt                          = $456.7m
Gearing                               = 34.4%
NAV                                   = 103.12 cents

Remarks.In the press release, it stated that the issue of $60m subordinated perpetual securities at a fixed distribution rate of  5.68% for the first 5 years will reduce gearing from 34% to 30% as the proceeds will be used to reduce debt and increase debt headroom for further acquisition. I find this sort of statement misleading as perpetual securities are still considered as a form of debt, in my view.Definitely, a gearing of 30% without any perpetual securities is quite different from a gearing of 30% with $60m perpetual securities. I believe FirstReit is not the only REIT that is doing this, a number of reits have raise perpetual securities to get around borrowing from banks.

Currently, the manager hold about 5.67% of the total number of units issued. Each quarter, 70% of the management fee is paid with units and the remainder 30% paid with cash.