ParkwayLife REIT’s manager announced (along with sponsor IHH Healthcare) a long awaited Master Lease Agreement renewal of its three hospitals in Singapore, Mount Elizabeth, Gleneagles and Parkway East Hospital on July 14.
Based on pro forma numbers for FY2020, the distribution per unit (DPU) of 13.79 cents rises to 14.3 cents at the end of year 1 of the renewal term, and to 18.26 cents at the end of year 4. The increase in rents of the new master lease agreement will also have a positive impact on valuation. PLife REIT’s net asset value (NAV) was at $1.96 as at Dec 31, 2020. Based on this, pro forma NAV would be $2.35 at the end of year 1 and $2.49 at the end of year 4. Asset valuation of the REIT would rise to $1.45 billion at the end of year 1 from $1.21 billion as at Dec 31, 2020, and to $1.69 billion at the end of year 4. Plife REIT's total portfolio value as at Dec 31, 2020 was $2.02 billion.
In connection with the Master Lease Agreement, and the proposed capital expenditure of $150 million to upgrade the properties (renewal capex), PLife REIT’s sponsor IHH Healthcare will grant the REIT a right of first refusal for Mount Elizabeth Novena Hospital Property for a period of 10 years. Mount Elizabeth Novena was valued at RM3.96 billion as at Dec 31, 2020.