Distribution Per Unit at Parkway Life REIT Grows 7%

Parkway LifeParkway Life Real Estate Investment Trust (SGX: C2PU), or PLife REIT, released its first quarter results yesterday. The REIT, an associate company of IHH Healthcare Berhad (SGX: Q0F), announced a 6.8% year-on-year rise in gross revenue to S$24.6 million. Its net property income grew 6.9% to S$23 million while its distribution per unit (DPU) also gained a healthy 6.9% to 2.82 Singapore cents. In the previous year, DPU was at 2.64 Singapore cents.

PLife REIT invests in real estate used mainly for healthcare and healthcare-related purposes. It owns a total of 47 properties in Singapore, Japan and Malaysia. In our city-state, it owns Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital. As of 31st March 2014, its total portfolio size was around S$1.5 billion.

For the latest quarter, gross revenue rose from S$23.0 million last year to S$24.6 million mainly due to higher revenue derived from rental income contributions from Japanese properties acquired in July and September of last year and higher rent generated from Singapore properties.

Consequently, the DPU increase was also attributed to the Japanese properties acquisitions in 2013 and rental growth of existing properties.

PLife REIT’s balance sheet had weakened slightly from a year ago as its gearing level had increased from 33% to 35%, as of 31st March 2014. Comparatively, First REIT (SGX: AW9U), another healthcare REIT listed locally, had a gearing ratio of 32%. The weighted average term to maturity was 3.11 years, with average interest rate of the loans at 1.5%. The net asset value per unit stood at S$1.63, unchanged from three months ago.

On top of the acquisitions in the second half of last year, in March this year, the REIT acquired two nursing homes and an extended-stay lodging facility for the elderly in Osaka, Japan. This move further expands its portfolio in the Land of the Rising Sun, where it has already entrenched itself as a market leader.

Furthermore, in the latest quarter, it completed three projects of asset enhancement initiatives for its Japan nursing homes and a maiden project for the strata-titled units owned at Gleneagles Intan Medical Centre in Kuala Lumpur, Malaysia.

Mr Yong Yean Chau, Chief Executive Officer of the manager of the REIT, was upbeat about the latest results, saying, “Once again, our steady growth is a testament to the strengths of our core strategies and favourable lease structures. The seven Japan properties acquired last July and September yielded rental income that largely boosted our revenue growth year-on-year. Having acquired another three properties in Japan and completed another three Asset Enhancement Initiatives in the first quarter of this year, the REIT is well on track with its proven strategies, as it continues to seek new opportunities that will further enhance value for unitholders.”

PLife REIT last changed hands at S$2.50 on Friday. This translates to a price-to-book ratio of 1.5 and a distribution yield of 4.4%, taking into account the latest DPU and that of the preceding three quarters.