PLife – BT

PLife Reit to distribute all taxable income

PARKWAY Life Real Estate Investment Trust (Reit) has said it will distribute 100 per cent of its taxable income and net overseas income this year, amid concerns over falling dividend yields among locally listed trusts.

The assurance came on top of strong performance in the first quarter of this year. The healthcare Reit yesterday posted a 16.6 per cent jump in Q1 distributable income to $11.4 million, boosted by higher rent from the Singapore hospitals in its portfolio.

The higher rental income resulted from a formula pegged to the CPI rate.

At the point of the last revision in August, the rental growth rate was fixed at 6.25 per cent, based on a CPI+1 per cent formula.

Distribution per unit (DPU) for the three months ended March was 1.89 cents, up from 1.62 cents. Gross revenue rose 37.6 per cent to $16.3 million.

‘Amid the current tight credit situation, PLife Reit is in an advantageous position with no refinancing requirements until the second half of 2010,’ said Yong Yean Chau, chief executive of Parkway Trust Management (PTM), which manages the Reit.

‘We are geared at 23 per cent – among the lowest in the Singapore Reit sector and well within the statutory limit of 60 per cent. Bolstered by a strong balance sheet, we are equipped with the strength and flexibility to fund future growth.’

The Reit has identified Singapore, Japan, Malaysia and Australia as its core markets for now.

Mr Yong said these are relatively mature markets with sound legal frameworks and credible healthcare facility operators. He is leaving out China and India for now.

‘We don’t want to risk buying some properties for the sake of good yield and at the end of the day, risk the overall portfolio,’ he said. Any acquisition should ‘enhance the defensiveness of the portfolio rather than increase its risks’.

Total asset value fell to $1.07 billion at end-March, from $1.08 billion. This was due to a drop in the Japanese yen.

At March 31, total debt was $247.5 million. Property expenses rose 52.4 per cent to $1.2 million, primarily due to spending related to properties in Japan.

The Reit has also issued more than 380,00 new units as payment to its manager for 20 per cent of the management fee. The rest of the fee was paid in cash.

This resulted in the deemed interest of Parkway Holdings increasing to 35.64 per cent, from 35.58 per cent, through wholly-owned subsidiary PTM.

Mr Yong said a future unit incentive scheme for staff may be taken from the pool of units issued.