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Parkway Life REIT posts 0.7% higher 2Q21 DPU of 3.38 cents; 4% higher 1H21 DPU of 6.95 cents

Atiqah Mokhtar
Atiqah Mokhtar7/27/2021 08:26 AM GMT+08  • 4 min read
Parkway Life REIT posts 0.7% higher 2Q21 DPU of 3.38 cents; 4% higher 1H21 DPU of 6.95 cents
1H21 distributable income grew 4% to $42.1 mil.
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Parkway Life REIT (PLife REIT) has posted 2QFY2021 ended June distribution per unit (DPU) of 3.38 cents, up 0.7% y-o-y from 3.36 cents previously.

This brings its 1HFY2021 DPU to 6.95 cents, up 4% y-o-y from 6.68 cents previously.

Gross revenue declined by 2.3% y-o-y in the 2QFY2021 to $29.6 million and by 1% y-o-y in the 1HFY2021 to $59.6 million. The manager attributes the decline to the loss of income from the divestment of non-core property in Japan in January, as well as the depreciation of the Japanese yen.

Given the lower revenue, net property income (NPI) decreased by 2.8% y-o-y for the 2QFY2021 to $27.4 million and by 0.9% y-o-y for the 1HFY2021 to $55.5 million.

However, distributable income was up 0.7% y-o-y in the 2QFY2021 to $20.5 million and up 4% y-o-y in the 2HFY2021 to $42.1 million, which the manager attributes to the contribution from the acquisition of a Japanese nursing home in December 2020, as well as the absence of one-off Covid-19 related relief measures retained in FY2020.

In the press release accompanying the results, PLife REIT’s manager highlights its initiatives to grow in its key markets of Singapore and Japan.

On July 14, the REIT had announced new master lease agreements for its Singapore hospitals, including an extended term of 20.4 years, which will increase PLife REIT’s weighted average lease to expiry from 5.7 to 16.6 years, a renewal capital expenditure agreement of $150 million, and a right of first refusal for the Mount Elizabeth Novena Hospital.

See also: Analysts up target prices for Parkway Life REIT following renewal of Singapore hospitals' master lease

“The clear rental step-up structure and rent review formula of the new lease agreements will serve to provide sustained organic growth and rental income stream of PLife REIT,” says the manager.

For the 15th year of lease term commencing from August 23 to Aug 22, 2022, the minimum guaranteed rent for the Singapore hospitals is set to increase by 1.66% over the total rent payable for the preceding year.

The proposed entry into the new master lease agreements will require the approval of PLife REIT’s Unitholders which will be sought at an extraordinary general meeting to be convened in due course.

On the Japan front, PLife REIT had announced the implementation of its third asset recycling initiative with the acquisition of two freehold nursing homes in Japan, while non-core property P-Life Matsudo was divested at a sale yield of 4.3% with the divestment proceeds channelled to acquire the nursing homes at higher property yield of 5.7%.

See also: Parkway Life REIT acquires two nursing homes in Japan for $49.4 mil

“With the two Japan nursing homes secured with fresh 20-year master lease agreements, the quality of PLife REIT’s Japan portfolio is also enhanced as it further diversify its geographical spread and tenant base,” says the manager.

As part of its debt management, PLife REIT, has also refinanced its remaining JPY loan due in 2022 with a 5-year committed loan facility. With that, the weighted average debt term to maturity has extended from 3.3 years as at June 30 to 4.1 years.

Commenting on the results, Yong Yean Chau, CEO of the manager, says: “We are pleased that amidst continued disruptions worldwide given renewed Covid-19 waves and the emergence of new variants, PLife REIT has delivered another quarter of recurring DPU growth for our unitholders,”.

For more stories about where the money flows, click here for our Capital section

According to Yong, PLife REIT will remain focused on sustaining income, fortifying growth, and financial and risk and management. “To further pivot PLife REIT’s growth, we will also selectively seeking out strategic acquisitions and foster stronger partnerships for collaborative growth,” he adds.

Units in PLife REIT closed 5 cents or 1.07% higher at $4.72 on July 26.

Photo: PLife REIT

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