IHH’s Ebitda creates buffer for occupancy cost at ParkwayLife REIT

The Edge Singapore
The Edge Singapore 8/27/2021 08:25 PM GMT+08  • 2 min read
IHH’s Ebitda creates buffer for occupancy cost at ParkwayLife REIT
The occupancy cost as defined by rent/Ebitda of ParkwayLife REIT's Singapore hospitals is around 15% based on IHH's results
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On Aug 26, IHH Healthcare announced revenue, Ebitda, and net income grew to RM8.2 billion, RM2.1 billion and RM858.9 million respectively in 1HFY2021, for the six months to June 30. Singapore’s Ebitda was RM890.3 million ($287 million), which comprises Parkway Pantai. ParkwayLife REIT is reported under its own segment.

Assuming that the yield on Mount Elizabeth Novena is around 4.8% - IHH says its hospital capitalisation rates range from 4.8% to 6.7% - Mount Elizabeth Novena’s Ebitda is likely to be around $49 million, market watchers indicate. Parkway Pantai has around 45 clinics of which nine or so are in medical centres of the hospitals. Based on ParkwayLife REIT’s rental revenue from its Singapore hospitals of $34.9 million, its rent/Ebitda ratio is likely to be at approximately 15% in 1H2021.

This is significantly below the levels of ParkwayLife REIT’s Japanese nursing homes, which are in the ‘normal’ 45% level, and the rent/Ebitda ratios of other healthcare REITs, market observers indicate.

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