Parkway Life Reit sees 3.7% drop in Q2 DPU on absence of one-off divestment gain

Parkway Life Reit's Singapore assets include Gleneagles Hospital on Napier Road.
Parkway Life Reit's Singapore assets include Gleneagles Hospital on Napier Road.PHOTO: ST FILE

SINGAPORE - Parkway Life Real Estate Investment Trust (Reit) saw distribution per unit (DPU) fall 3.7 per cent to 3.19 cents for the three months ended June 30. This was due to the absence of, for this fiscal second quarter, a one-off distribution of a divestment gain in the year-ago period, which more than offset a 3.1 per cent rise in DPU from recurring operations.

Distributable income for the Reit's second quarter - entirely from recurring operations - was S$19.3 million, down from Q2 2017's total distributable income of $20.1 million, but higher than its $18.7 million distributable income from recurring operations.

For Q2 2018, net property income rose 1.2 per cent year-on-year to $26.2 million, on the back of a 1.3 per cent rise in gross revenue to $28.1 million. This was largely attributed to revenue contribution from the acquisition of Japan property in February 2018, higher yielding properties acquired from the asset recycling initiative completed in February 2017, and higher rent from Singapore properties, offset by the depreciation of the Japanese yen (JPY).

In a media statement on Thursday (July 26), the group noted that for the 12th year of lease term, from Aug 23, 2018 to Aug 22, 2019, the minimum guaranteed rent for Singapore properties will see an upward revision of 1.38 per cent over the total rent payable for the preceding year.

The group, which has a portfolio of 46 healthcare properties in Japan, also extended its JPY net income hedge for another year, shielding it from currency volatility till Q1 2023.

As at June 30, the group has no long-term debt refinancing needs till 2019, with its interest rate exposure largely hedged. The interest coverage ratio stood healthy at 13.5 times, with optimal gearing at 38.1 per cent.

Unitholders will receive their DPU for the second quarter on Aug 28.

Parkway Life Reit units closed up one cent or 0.36 per cent at $2.78 on Wednesday before the Q2 results were released.