PLife – BT

P-Reit remains optimistic on outlook

AMID challenging market conditions, the manager of Parkway Life Reit (P-Reit) remains optimistic about its outlook and has already repositioned its finances so that it can be more flexible.

The healthcare property trust yesterday reported a third-quarter income available for distribution of $10.3 million, boosted by higher rental rates and income from recently acquired properties.

The performance brings the distribution per unit (DPU) for the three months ended September to 1.71 cents, or 0.15 cents higher than its earlier forecast of 1.56 cents.

In the same quarter last year, income available for distribution was $4.1 million. The huge disparity was because the healthcare property trust was only listed midway through Q3 last year.

‘Despite challenging market conditions, we remain optimistic about our medium and long-term prospects,’ said Justine Wingrove, CEO of Parkway Trust Management, the Reit’s manager. ‘This is due to several factors, namely, our rental lease structures that protect against downside risk while providing for good future rental growth, our low gearing, a 100 per cent occupancy across the portfolio and investment grade credit rating of BBB+.’

P-Reit, which holds the Mount Elizabeth, Gleneagles and East Shore hospitals in its Singapore portfolio, posted gross revenue of $13.3 million. It was higher than the forecast of $11.5 million due to a variable rent component pegged to the Consumer Price Index (CPI) which pushed up the minimum rental rates. After subtracting expenses of $877,000, the net property income came to about $12.5 million.

Contribution from its Japan portfolio, including nursing homes and pharmaceutical facilities, came to $1.1 million.

The quarter also saw the mainboard-listed trust diversify its credit facilities. It entered into three-year facilities worth $100.6 million in September. The facility was fully drawn last month to partially refinance short-term debt. A separate three-year revolving credit facility of $100 million has also been secured.

‘By replacing short-term credit facilities with longer term facilities, P-Reit faces no refinancing risk,’ explained Ms Wingrove. ‘In terms of future growth, adequate and diversified financing sources that have been secured will also provide us with the flexibility and acquisitive power to support our future expansion.’

P-Reit also has in place a $500 million multi-currency medium-term note programme, which may be used to fund future acquisitions. Its gearing stands at 19.7 per cent.

The trust has an asset portfolio of $1 billion. For the first nine months of this year, total distributable income came to $30.1 million, on the back of $37.7 million in gross revenue. DPU so far is five cents.

Shares of P-Reit slipped two cents yesterday to close at 76 cents.