UPDATE: Parkway Life REIT 3Q18 net property income up 2.5 percent on acquisition, higher Singapore rents

Singapore two-dollar billsSingapore two-dollar bills

Parkway Life REIT reported on Thursday its third quarter net property income rose 2.5 percent on-year to S$26.52 million on contributions from a nursing rehabilitation facility acquired in February and higher rent from Singapore properties.

Gross revenue rose 2.5 percent on-year to S$28.40 million for the quarter ended 30 September, it said in a filing to SGX before the market open on Thursday.

The distribution per unit (DPU) was 3.23 Singapore cents for the quarter, down 4.1 percent on-year, from 3.37 Singapore cents in the year-ago quarter, due to the absence of a one-off distribution gain, it said.

That was after the S$5.39 million after-tax gain from the divestment of four Japan properties in December 2016 was distributed over four quarters in 2017, it said. Excluding the one-off gain, DPU from recurring operations would have risen by 2.7 percent on-year, it said.

For the nine-month period, net property income rose 2.3 percent on-year to S$78.68 million, while gross revenue increased 2.3 percent to S$84.27 million, it said. The DPU for the nine-month period was 9.59 Singapore cents, down 3.7 percent on-year from 9.97 Singapore cents, it said.

The REIT manager said that it preemptively refinanced all of its loans due next year and now has no long-term refinancing needs until 2020; it’s “all-in” cost of debt was at 0.94 percent, it said.

Outlook

The REIT manager issued a cautiously positive outlook.

“The long-term outlook of the industry continues to be driven by aging population and demand for better quality healthcare and aged care services,” it said, saying it was in a “good position” to benefit based on its portfolio of 50 properties.

“The portfolio is largely supported by favorable rental lease structures, where at least 95 percent of its Singapore and Japan portfolios have downside revenue protection and 62 percent of the total portfolio is pegged to CPI-linked revision formula, ensuring steady rental growth whilst protecting revenue stability amid uncertain market conditions,” it said.

But it added, “Notwithstanding that, Parkway Life REIT remains cautious and vigilant given the current uncertainties in the macro economy and volatility in the financial market.”

Parkway Life held 50 properties in the Asia Pacific region at the end of the quarter, including three hospitals in Singapore, 46 healthcare and healthcare related assets in Japan and strata titled units/lots in Gleneagles Intan Medical Centre in Kuala Lumpur, Malaysia, it said.

This article was originally published on Thursday 25 October 2018 at 7:33 A.M.; it has since been updated. 

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