OUE’s First REIT Selling Entire Indonesia Portfolio for Up to $597M

First REIT has agreed to divest its entire Indonesia portfolio for up to S$766 million ($597 million), the Singapore-listed healthcare trust said Wednesday.

The proposed transactions include the sale of eight hospital assets to Siloam International Hospitals for S$389.2 million, according to the announcement. To other buyers, First REIT will sell a mall and hotel on the island of Sulawesi for S$53.3 million and a lease of commercial rights to a mall in the southern city of Kupang for S$29.1 million, offloading the non-core assets to bring total confirmed proceeds to S$471.5 million.

First REIT has also secured put options from Siloam to sell its remaining six hospitals in Indonesia for S$294.8 million, which if exercised would complete the OUE-sponsored trust’s exit from Southeast Asia’s largest economy. The transactions follow a strategic review launched in January of last year after Siloam, the longtime tenant and operator of the hospitals, submitted a non-binding offer to acquire them.

“The manager maintains certainty for the divestment of remaining Indonesia assets and timing flexibility for redeployment for the put option properties,” said Victor Tan, executive director and CEO of the trust’s manager. “More importantly, the proposed divestments are expected to optimise First REIT’s capital structure to position First REIT for growth, with a focus on developed markets.”

Strategic Exit

The portfolio disposal is aimed at eliminating foreign exchange volatility between the Indonesian rupiah and the Singapore dollar, which has weighed on distributions, while addressing income drag from assets with rental arrears and non-core exposure, the manager said.

The move is expected to significantly strengthen First REIT’s balance sheet, with aggregate leverage projected to fall to 16.7 percent after completion, alongside annual interest cost savings of S$18.8 million.

Net proceeds will be used primarily to repay debt tied to the Indonesian assets, with part of the gains earmarked for a special distribution to unitholders and future investments. The divestment marks a strategic pivot towards developed markets, with the manager highlighting improved currency stability, lower financing costs and stronger tenant profiles as key advantages.

“The board is encouraged with the progress of the strategic review as the proposed divestments provide transaction certainty amidst an increasingly challenging macroeconomic environment in Indonesia,” said Christopher James Williams, chairman of the manager.

Riady Vehicles Sweep Up

The eight hospitals being sold to Siloam include facilities across Jakarta, Bali and other key markets, forming the bulk of First REIT’s Indonesia exposure built up over nearly two decades.

The non-core Lippo Plaza Baubau and Hotel Aryaduta Manado in Sulawesi are being picked up by Lippo Karawaci, a property firm controlled by the Riady family behind Lippo Group and REIT sponsor OUE. The prepaid lease deal for Lippo Plaza Kupang was agreed with Metropolis Propertindo Utama, another Lippo affiliate.

If the put options are exercised, the remaining six hospitals — including assets in Jakarta, Makassar and Yogyakarta — would complete First REIT’s exit from Indonesia, allowing the trust to redeploy capital into markets like Singapore, Japan and Australia.

The transactions are subject to unitholder approval, with completion targeted for this August, according to the manager.