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Parkway Life REIT reports DPU of 7.06 cents for 1HFY2022, assuages currency and rates exposure

The Edge Singapore
The Edge Singapore • 3 min read
Parkway Life REIT reports DPU of 7.06 cents for 1HFY2022, assuages currency and rates exposure
Gleneagles Hospital is one of the three Singapore hospitals that forms the REIT's portfolio / Photo: Samuel Isaac Chua
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Parkway Life REIT has reported a distribution per unit of 7.06 cents for 1HFY2022 ended June, up 1.5% y-o-y.

Net property income for the same period was $56 million, up 1.1% y-o-y, revenue was up 1% to $60.18 million.

The distribution will go ex on Aug 16 and be paid on Aug 19.

The slight increase was due to contributions from three newly acquired nursing homes in Japan, as well as higher rent collected for its Singapore properties.

However, the gains were partially offset by loss of income from properties sold off, as well as unfavourable forex movements versus the yen.

The REIT’s three key assets in Singapore are Mount Elizabeth Hospital Property, Gleneagles Hospital Property and Parkway East Hospital Property, contributing some 60.6% of the REIT’s net property income for 1H 2022.

See also: Cordlife posts net loss of $11.57 mil for 1QFY2024 due to refund fulfilment

This month, the renewed lease for these three properties took effect. Under terms of the renewal, the lease is to last another 20.4 years, and rents are guaranteed to increase with a 2% step-up for the interim period from August 23 2022 to Dec 31 20223.

For the subsequent three years, the step-up would be 3% per year to Dec 31 2025.

“With the annual (CPI+1%) rent review formula in-place for the subsequent 17 years, the Singapore hospitals will continue to underpin the organic growth of PLife REIT, providing a sustained quality rental income stream for the group,” says the REIT’s manager.

See also: Changi Airport Group reports FY2024 earnings of $431 mil, 13.1 times higher y-o-y

As part of the lease renewal arrangement for the three hospitals, PLife REIT will inject a one-time renewal capex of $150.0 million to renovate and upgrade the properties.

IHH Healthcare, the sponsor, and PLife REIT are now working closely to plan and execute the works.

With the interest rates rising and Japanese yen depreciating in recent months, PLife REIT says that it remains proactive in managing its exposure.

In April 2022, its yen net income hedges was extended till 1Q 2027, and about 82.0% of the interest rate exposure has been hedged, providing stability for unitholders.

As at June 30 2022, there are no long-term debt refinancing needs for PLife REIT till June 2023.

Its gearing remains optimal at 32.5% well within the regulatory gearing limit of 50.0%.

“In the face of increasing macroeconomic uncertainties, interest rate hikes and challenges ahead, the group’s key priority remains in building PLife REIT’s resilience continuum,” says Yong Yean Chau, CEO of the REIT’s manager.

“As the group strategically navigates for growth opportunities, relentless efforts remain on proactively managing its portfolio as it engages in prudent capital and financial management to mitigate any potential refinancing, interest rate and foreign exchange risks,” he adds.

PLife REIT closed at $4.80, up 0.42% for the da

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