PLife – BT

Parkway Life Reit on the prowl

HOT on the heels of two recent acquisitions, Parkway Life Reit has indicated it could take a more aggressive growth stance as the recovering property sector in the Asia-Pacific presents more acquisition opportunities.

‘The global economic recovery has driven improvements in the regional real estate and Reit markets, bringing about further growth opportunities for Parkway Life Reit,’ said Yong Yean Chau, CEO of the trust’s manager Parkway Trust Management. ‘With the improving economy, healthcare operators are looking to expand by going asset-light, thereby enlarging the pool of healthcare assets available in the market and availing of more options for Parkway Life Reit in our selection of good-quality acquisition targets.’

Without revealing where the targets are, Mr Yong said the Reit has ‘a strong acquisition pipeline’. He added his company had been approached by more healthcare asset owners looking to sell their properties. However, the trust will continue to target developed and mature markets that share similar legal frameworks and risk profiles as Singapore, such as Malaysia and Australia.

As for Japan – where the trust recently acquired six nursing care facilities in June and another five nursing homes in July – it will be looking to consolidate and derive greater synergy across its properties.

Meanwhile, its portfolio of properties in Japan already accounted for 28 per cent of its Q2 net property income of $17.3 million, according to financial results announced yesterday. The Reit posted a 10.9 per cent increase in Q2 income distributable to unitholders to $12.6 million.

For the three months ended June, gross revenue went up 16.4 per cent to $18.7 million, boosted by contributions from the Japan acquisitions and higher rent from existing properties in Singapore. Q2 distribution per unit (DPU) works out to 2.09 cents, up from 1.89 cents a year back.

Including DPU of 2.07 cents in Q1, DPU for the first half came to 4.16 cents. On an annualised basis, this is a yield of 6.11 per cent, based on the closing share price of $1.36 at end-June.

Property expenses in Q2 went up 27.2 per cent to $1.4 million, while non-property expenses rose 27.6 per cent to $4.7 million. The Reit is due to refinance its Japanese yen loan facilities, amounting to about $207 million, in H2 next year. But it plans to do so by the current quarter. As at June 30, its debt-to-asset ratio was 32.6 per cent.

Other than its 29 properties in Japan, Parkway Life Reit’s assets include the Mt Elizabeth, Gleneagles and Parkway East hospitals in Singapore. Its total asset value is about $1.3 billion.