An oasis in sea of turbulence

Parkway Life REIT invests in income-producing real estate assets in the Asia Pacific region used primarily for healthcare and related purposes. They include hospitals, ambulatory surgery centres, primary clinics, medical office building, step-down care facilities, research & development facilities and pharmaceutical facilities in China, India, South East Asia and the Middle East.

The initial portfolio comprising Mount Elizabeth Hospital, Gleneagles Hospital and East Shore Hospital represents the largest portfolio of private hospitals in Singapore. Mount Elizabeth Hospital and Gleneagles Hospital, in particular, are located in the heart of prime Orchard Road shopping district.

Riding on growing demand for healthcare. Parkway Holdings will lease the three hospitals from Parkway Life REIT for an initial term of 15 years with an option to extend for another 15 years. The annual rental for each of the properties comprises a base rent (S$30m) and a variable rent (3.8% of adjusted hospital revenue). The variable rent component is linked to adjusted hospital revenue, allowing unitholders to participate in growth of the healthcare industry.

Singapore is a healthcare-hub in Asia. The population in Singapore is ageing. The life expectancy for male has increase from 76 years in 2000 to 78 years in 2006. The life expectancy for female has correspondingly increased from 80 years to 81.8 years (source: Ministry of Health). The proportion of people aged 65 or older is projected to increase from 6.9% of total population in 2006 to 18.9% by 2030. Already, Parkway Holdings’s revenue per patient day has increased at CAGR of 16.2% from S$1,258 in 2004 to S$1,699 in 2006.

Parkway Life REIT also benefits from the growth in medical tourism. International patient inflow in Singapore has increased at CAGR of 35.4% from 98,700 in 2001 to 448,800 in 2006 (source: MOH and Frost & Sullivan). Singapore aims to attract 1m foreign patient visitors by year 2012.

Acquisition growth strategy. Parkway Life REIT will source and acquire assets in the Asia Pacific region, which are distribution yield accretive and have potential for future earnings and capital growth. Parkway Life REIT will also seek to improve portfolio diversification and asset quality. It is already evaluating opportunities for acquisitions in Singapore, Malaysia, India and China. Parkway Life REIT has been granted the right of first refusal by Parkway Holdings over future sale of healthcare and related facilities located in the Asia Pacific region. Parkway Holdings operates 15 hospitals in Singapore, Brunei, India and Malaysia. It also operates an ambulatory surgical centre and clinics in China and an aesthetics clinic in Vietnam. These assets provide a pipeline of potential future acquisitions. Parkway Life REIT will also identify greenfield sites for development of hospital and healthcare-related facilities. It also seeks to acquire third party hospital and healthcare-related properties.

Parkway Life REIT offers attractive yield. Parkway Life’s yield is comparable to hospitality REITs such as CDL Hospitality Trust and Ascott REIT. Its yield is nevertheless much more attractive when compared to REITs investing in commercial, retail or industrial properties.

Parkway Life REIT commences trading on “ready” basis at 2pm on 23 Aug 07.

Parkway Life Reit aims to double asset size

It aims to expand its portfolio size to $1.6b by end-2009

PARKWAY Life Real Estate Investment Trust (Parkway Life Reit), which launched its initial share offering yesterday, hopes to double its asset portfolio size in two years’ time, the Reit’s manager told BT yesterday. Right now, the Reit’s portfolio comprises three private hospitals and medical offices in Singapore worth $774.6 million in total. Justine Wingrove, chief executive of the Reit’s manager, aims to double the portfolio size to about $1.6 billion by end-2009.

A new acquisition could be expected in the next six months, Ms Wingrove said.

‘We have four key markets that we are focusing on – Singapore, Malaysia, India and China,’ she said. ‘There are more immediate opportunities in Singapore, but we are also looking at opportunities elsewhere.’

The trust, she said, can easily draw from sponsor Parkway Holdings’ asset base. Parkway, which is Asia’s largest listed healthcare operator, has some 17 hospitals and medical centres across Asia under its umbrella, including the three being divested into the Reit.

Also, the trust is looking to buy from third-party vendors, Ms Wingrove said.

For the initial share offer, the trust is offering 288.9 million units at $1.28 apiece – raising about $369.8 million.

Some 253.6 million units will be placed out to institutional and other investors, of which 14.6 million units are reserved for subscription by the directors, management, employees and business associates of Parkway Holdings.

Another 5.9 million units are being offered to the public. In addition, 29.4 million units will be allocated to the Singapore registered shareholders of Parkway Holdings on the basis of one unit of the Reit for every 20 shares in Parkway.

There is also an over-allotment option for up to another 43.3 million units.

Assuming the option is exercised, Parkway will hold some 30.1 per cent of the Reit, while the free float will account for another 55.9 per cent.

The rest of the trust (14.0 per cent) will be held by ‘cornerstone investor’ TPG Capital, which also holds a substantial stake in Parkway.

The trust forecasts an annualised yield of 4.7 per cent for the 2007 financial year. This is expected to increase to 4.9 per cent in 2008 and 5.0 per cent in 2009.

Ms Wingrove said that despite the recent downturn in market sentiment, the Reit has seen strong demand from institutional investors. The placement tranche is about 13 to 14 times oversubscribed, she said.

Parkway shares closed four cents up at $3.72 yesterday.

Parkway Life REIT launches IPO at S$1.28 a unit

SINGAPORE : Singapore’s largest private hospital operator Parkway Holdings has launched the IPO of its healthcare real estate investment trust. It is offering 288.9 million units at S$1.28 each. Parkway is hoping to raise nearly S$370 million for acquisitions in its key markets of Singapore, Malaysia, India and China.

Parkway Life REIT is starting out with a portfolio of three hospitals – Gleneagles, Mount Elizabeth and East Shore. It includes 68 medical offices and 559 parking lots and is worth some S$775 million.

It expects to deliver an annualised distribution yield of 4.74% a unit for 2007. It’s forecasting distribution yields of 4.88% for 2008 and 5% for 2009.

Besides enhancing existing assets to grow, the trust manager says it’s looking to acquire other hospitals and health care-related assets. These include surgery centres, nursing wards, as well as warehouses and logistics facilities. For now, it’s targeting four key Asian markets and a total of 356 medical offices worth over $1 billion in Singapore.

“I’m comfortable to say that over the course of the next two years, we’ll be doubling the size of the asset base of the REIT. Our tier one markets are Singapore, Malaysia, India and China. Our pipeline of acquisitions is heavily weighted towards third-party acquisitions. And we’ve also got immediate opportunities we’re looking at in Singapore,” says Justine Wingrove, CEO of Parkway Trust Management.

The IPO closes on August 13, with trading scheduled to begin on August 23. – CNA /ls

Parkway Life REIT IPO Prices At S$1.28/Unit; Raises S$370M‎

Parkway Life Real Estate Investment Trust has priced units at S$1.28 each in its Singapore initial public offering, according to a prospectus filed with the Monetary Authority of Singapore Tuesday.

The pricing confirms a report by Dow Jones Newswires last week that units would be sold in the upper half of an indicative range of S$1 – S$1.34 each.

The IPO, which will raise S$370 million, includes a public tranche of 5.9 million units and a shareholders’ tranche of 29.4 million units on the basis of one unit for every 20 shares of Parkway Holdings Ltd. (P27.SG).

The public offering opens at 1200 GMT Tuesday and closes at 0400 GMT on Aug. 13, while the offer to Parkway shareholders opens at 2300 GMT Aug. 12 and closes at 0845 GMT on Aug. 17.

Based on projected distributions, the trust will pay an annualized yield of 4.74% in 2007 and 4.88% in 2008.

The units are expected to begin trade on the Singapore exchange at 0600 GMT on Aug 23.

Citigroup Inc. and UBS AG are underwriting the offering.

Source : Dow Jones Newswires