Fortis mulls real estate investment firm

The second-largest hospital chain operator in the country, Fortis Healthcare Ltd is evaluating a plan for the transfer of its land assets to a real estate investment trust (REIT). The trust would in turn raise funds for expansion, according to a top company official.

Although the quantum of money to be raised by the REIT has not decided, nor the stock exchange where it is proposed to be listed or its time frame, the Delhi-based firm's plan forms part of its strategy to emerge as an 'asset light company', Shivinder Singh, MD, Fortis Healthcare said on Tuesday.

According to earlier media reports, Fortis was looking to list the proposed REIT in Singapore with a valuation of $600-$700 million.

If the company goes ahead with this restructuring, it would have to transfer all its assets to a separate firm for a consideration and lease back the land and buildings for its operations. The company can then sell equity stake in the REIT to generate cash for expansion of the hospital chain.

According to Fortis Healthcare CFO Yogesh Sareen REIT was a perfect fit and the company had been considering the option for over a year, but there were regulatory hurdles.
Fortis' net profit for the quarter ended December '10 rose 59 per cent over the year-ago period to Rs35 crore on a boost by 'other income' of Rs 37 crore as returns from surplus funds. Over the last four quarters the company's bottom line has received support from other income. The company's bottom line has been supported by other income for the past four consecutive quarters. The company's net revenue during the quarter rose was up 60 per cent at Rs 371 crore, from the corresponding period last fiscal.
The company is owned by billionaire brothers Malvinder and Shivinder Singh. It has plans for adding  900 beds by next fiscal by adding four hospitals, of which three of would be under operation and management control model with Fortis not owning the land or building.