Parkway Life Reit posts 10.2% fall in Q2 DPU on absence of one-off divestment gain

SINGAPORE -Parkway Life Real Estate Investment Trust said its distribution per unit for the second quarter dropped 10.2 per cent to 3.01 Singapore cents from 3.35 cents a year ago due to the absence of one-off distribution of divestment gain.

For the first half-year, DPU was down 8.6 per cent to 6.00 cents, the Reit reported on Tuesday (July 26).

Gross revenue increased 6.8 per cent to S$27.4 million for the second quarter driven primarily by contribution from one nursing home acquired on March 31, higher rent from its Singapore hospitals and appreciation of the Japanese yen as compared to the same period last year.

After deducting property expenses, net property income for the second quarter was 6.4 per cent higher at S$25.5 million from S$24 million a year ago.

The Reit manager noted that because of its hedge strategy on its Japanese yen income, the group registered a realised foreign exchange gain of S$300,000 in Q2 S$700,000 in H1 respectively.

It also said the Reit has no long-term debt financing needs until the second half of 2018 as in June, it secured an approximately S$85.6 million term loan facility to pre-emptively term out the remaining loan due in FY2017 and about 27 per cent of loans due in FY2018 for another five years.

The Reit's Singapore hospital properties continued to enjoy growth based on its minimum guaranteed rent for the 10th year of its lease term from Aug 23, 2016, to Aug 22, 2017. For this period, they will continue to register a 1.0 per cent increase in minimum guaranteed rent above the total rent payable for the previous year.

In Singapore, Parkway Life Reit owns the three private hospitals - Mount Elizabeth Hospital, Gleneagles Hospital, and Parkway East Hospital.

In total it owns 48 properties in the Asia-Pacific, 44 healthcare and healthcare-related assets in Japan and strata titled units/lots in Gleneagles Intan Medical Centre, Kuala Lumpur, Malaysia. Its total portfolio size stands at approximately S$1.7 billion as at June 30.

Commenting on the outlook, Mr Yong Yean Chau, chief executive officer of the Reit's manager, said: "Amidst the challenging macroeconomic environment, S-Reits are viewed as safe haven instruments. Coupled with the fact that we are well-protected against downside revenue movements, we believe this would help bulwark the risks posed by the volatility in the financial markets.

"However, we remain keenly aware on the challenges and will continue to approach expansion opportunities in a disciplined manner. We remain committed to staying on track with our proactive financial and capital management strategy in place, we will also sharpen our focus on expansion opportunities with the aim of growing greater value and delivering results to our unit holders."